US FATCA: Sections 1471 to 1474 of the United States Internal Revenue Code of 1986, commonly referred to as the Foreign Account Tax Compliance Act, (“US FATCA”) was enacted in the United States in 2010 in order to reduce perceived offshore tax evasion by US persons holding assets through offshore accounts that were not subject to US information reporting to the United States Internal Revenue Service (the “IRS”). On 29 November 2013, the Cayman Islands government signed a Model 1B (i.e. non-reciprocal) intergovernmental agreement with the United States in connection with the implementation of US FATCA (the “US IGA”).
UK FATCA: On 5 November 2013, the Cayman Islands government signed an intergovernmental agreement with the United Kingdom (the “UK IGA) aimed at improving international tax compliance by providing a framework for the implementation in the Cayman Islands of a reporting regime relating to UK tax residents (“UK FATCA”), which is similar in scope to US FATCA. With the implementation of the OECD Common Reporting Standard (as below), UK FATCA was phased-out and, since 2018, Cayman Islands entities only need to comply with regulations concerning US FATCA and the Common Reporting Standard.
Common Reporting Standard: On 29 October 2014, the Cayman Islands government signed a Multilateral Competent Authority Agreement to implement the Organization for Economic Cooperation and Development’s (the “OECD”) Global Standard for Automatic Exchange of Financial Account Information - Common Reporting Standard (the “CRS”). US FATCA and the CRS shall be referred to collectively in this guidance note as “AEOI”.