In previous updates we have alerted clients to the introduction of Cayman Islands regulations,1 which give effect to the automatic exchange of tax information principles established by the US and UK intergovernmental agreements (the "Cayman US Regulations" and the "Cayman UK Regulations", respectively).
While many Cayman Islands entities will be well prepared for the commencement of the account due diligence and related reporting obligations, we understand that some clients have been focused only on the requirements in the Cayman US Regulations, principally because of the related withholding tax that arises for non-compliance. The Cayman UK Regulations deal with "UK FATCA" requirements and there are additional key dates which should be noted in calendars for UK FATCA compliance purposes.
The Cayman Islands government, along with around 50 other countries, has also committed to the implementation of the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard (the "CRS") by the end of 2015. We expect legislation to be introduced in Cayman during 2015 to implement the CRS. The United States has, so far, not joined the CRS initiative given the extensive network of FATCA intergovernmental agreements it has already signed up. The CRS is similar to UK FATCA in terms of account due diligence and related reporting requirements. Like UK FATCA there is no underlying withholding tax regime.
As this is a continually evolving area of law in the Cayman Islands, we have set out in this update the current anticipated timeline with key dates under the Cayman US Regulations (which give effect to the US IGA), the Cayman UK Regulations (which give effect to the UK IGA) and the CRS. 2
View the FATCA and CRS timeline.
1 The Tax Information Authority (International Tax Compliance) (United States of America) Regulations, 2014 and the Tax Information Authority (International Tax Compliance) (United Kingdom) Regulations, 2014.
2 The timeline relates to entities that were in scope as Reporting FIs on or prior to 31 December 2014.