The DITC has advised the Industry that the Tax Information Authority (International Tax Compliance) (Country-by-Country Reporting) Regulations, 2017 ("CbCR Regulations") were made and gazetted on 15 December 2017. We set out below relevant sections of a high-level summary of important practical issues that are either addressed by or follow from the CbCR Regulations as published by the DITC. The DITC wishes to consult with industry on the draft CbCR Guidance Notes attached as Appendix III of the Advisory. Please email your responses to firstname.lastname@example.org at the DITC. The closing for submission of responses is 5pm on Friday 12 January 2017.
A. Overview of BEPS and CbCR
The Cayman Islands is a member of the OECD's Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
Please see this link for further OECD information on the BEPS Actions, generally:
CbCR (BEPS Action 13) is the aspect of the BEPS minimum standards which the Cayman Islands is currently implementing. CbCR applies to MNE Groups. Broadly speaking, an MNE Group is a collection of enterprises ("Constituent Entities") in different jurisdictions which are related through ownership or control, which would be expected to prepare consolidated financial statements, and which has total consolidated group revenue of at least US$850 million (or €750 million) in the preceding Fiscal Year. Please see these links for further OECD information on CbCR:
B. CbCR in the Cayman Islands
The Department for International Tax Cooperation (DITC) has updated its website to include the following new document on CbCR Legislation & Resources:
Any Constituent Entity that is resident in the Islands MUST notify the DITC that it is a member of an MNE Group and confirm the name and jurisdiction of the MNE Group's Reporting Entity, if that is not itself. For the first reporting period, the deadline for notification is 31 March 2018. Any entity which subsequently becomes a Constituent Entity must notify the DITC of that before the end of its Fiscal Year.
Any Reporting Entity, being either the Ultimate Parent Entity or the Surrogate Parent Entity, that is resident in the Islands MUST file a Country-by-Country Report (CbC Report) with the DITC.
The CbC Report MUST be in the form of the CbCR XML Schema, which is described in further detail here:
The Schedule to the CbCR Regulations includes the standard template and instructions on the CbCR.
The first Fiscal Year for CbCR purposes is the Fiscal Year which began during 2016. The deadline is 31 March 2018 in respect of Fiscal Years which began from 1 January to 31 March 2016 and within 12 months of the end of any Fiscal Year beginning after those dates. For example, an MNE Group with a Fiscal Year that began on 1 February 2016 must file its first CbC Report with the DTIC by 31 March 2018 whereas an MNE Group with a Fiscal Year that began on 1 May 2016 must file its first CbC Report with the DITC by 30 April 2019.
Each Reporting Entity which is required to file a CbC Report in 2018 should proceed with preparing the CbC Report as soon as practicable.
For the avoidance of doubt, the Cayman Islands does not require Reporting Entities to file Master Files and Local Files and also does not require Constituent Entities that are not Reporting Entities to file CbC Reports.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.