Each Cayman Islands Financial Institution should by now have filed its first report with the Cayman Islands Tax Information Authority (via the (AEOI) portal) in relation to its US reportable accounts (which was due to be filed on or before Friday 26 June 2015).
Each Cayman Islands Financial Institution is required to report on its UK reportable accounts on 31 May 2016 in respect of calendar years 2014 and 2015. If, however, the Financial Institution did not tick both the UK and US boxes when notifying the TIA that it would have reporting obligations, then that Financial Institution will need to make a further notification in respect of UK FATCA on or before 31 March 2016.
The Cayman Islands Ministry of Finance has recently announced that it plans to introduce regulations in October 2015 dealing with the implementation of the Common Reporting Standard (the “CRS”). The CRS is an OECD initiative and has been signed up to by about 50 countries as early adopters. It deals with the automatic exchange of account information for tax purposes (on a reciprocal basis). It seems there is much work left to do before this can be implemented and before the substantive effect is felt but the message at this point is for financial institutions to start preparing their (due diligence) systems to capture the information required in connection with the CRS – namely, the tax residency of all account holders. In light of the FATCA related systems that financial institutions have put in place the additional burden should hopefully be relatively light as this additional information gathering exercise might just be bolted on to the FATCA processes that financial institutions and their administrators are already implementing.
The information collected will also be submitted to the Tax Information Authority in the same way as the FATCA returns are submitted – through the portal. The Tax Information Authority will then exchange that information with countries where account holders are tax resident. The current expectation is that financial institutions will be required to start collecting the relevant data at the start of 2016, with reporting to commence in 2017.
We will provide a further update on this when the regulations are introduced (expected to be October this year) but should you have any questions regarding CRS in the meantime please do not hesitate to contact us.