Following the expiration of the 29 May 2015 notification deadline with the Cayman Islands Tax Information Authority (the "TIA"), the next step for all Cayman Islands Reporting Financial Institutions (each an "RFI") is to submit a return (the "FATCA Return") setting out certain details of any US Reportable Accounts that they may have maintained during the 2014 calendar year. This may include any pre-existing accounts and new accounts identified as reportable in 2014. As outlined in our prior updates, the FATCA Return is submitted through the TIA'sAutomatic of Exchange of Information Portal (the "Portal") and needs to be submitted on or before 26 June 2015. The FATCA Return can be submitted through the Portal in either XML format or by entering data manually in a web form.
What does the FATCA Return need to contain?
The FATCA Return must contain the following information in respect of each Reportable Account that has been maintained by the RFI at any time during the 2014 calendar year:
- the name and address of the account holder;
- the account holder's US federal taxpayer identifying number (unless the account holder is a pre-existing account and the RFI does not hold the taxpayer identification number, in which case, for any pre-existing account holders that are individuals, their date of birth must instead be reported if the RFI has been provided with such date);
- if an account is identifiable by an account number, that number or, if not, its functional equivalent;
- the balance or value of the account, including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value, as of the end of the calendar year or, if the account was closed during the year, the balance or value on the date that the RFI closes the account;
- if the account holder is a passive NFFE that has a Controlling Person who is a Specified Person, the name and address of that Specified Person, and, if that person is an individual, that person's US federal taxpayer identifying number and date of birth;
- the RFI's Global Intermediary Identification Number; and
- a statement as to whether paragraph 5 of Article 4 of the US IGA applies to the RFI (i.e. where the RFI may have Related Entities or branches that are non-participating financial institutions) and, if it does, whether the conditions under subparagraphs (a) to (c) of that paragraph have been met.
Although the due diligence procedures for UK FATCA should still be undertaken, the UK FATCA Return in respect of the 2014 reportable period is not required to be submitted to the TIA until 31 May 2016. At that time, RFIs will need to submit two UK FATCA Returns: one in respect of the 2014 reporting period, and one in relation to the 2015 reporting period.
The information required to be submitted under the UK FATCA Return is very similar to that described above in relation to US FATCA, other than the inclusion of the account holder's national insurance number and their date of birth if they are an individual. For pre-existing accounts, there is no requirement to include the national insurance number for calendar years before 2017, if such number is not held by the RFI.
Are NIL Returns Required?
The Tax Information Authority (International Tax Compliance)(United States of America)(Amendment)(No.2) Regulations, 2015 and The Tax Information Authority (International Tax Compliance)(United Kingdom)(Amendment)(No.2) Regulations, 2015 were both gazetted on 29 May 2015 and confirm that nil returns are no longer required to be filed, but that an RFI may choose to file a nil return should it wish to do so. The TIA have also noted in Version 1.2a to the Portal User Guide that nil returns are not mandatory, but that they may be submitted at the option of the RFI.
What is happening with the OECD Common Reporting Standard?
On 16 June 2015, the Cayman Islands Ministry of Financial Services, Commerce and Environment issued an Industry Advisory noting that specific Regulations would be issued in October 2015 in relation to implementing the Common Reporting Standard ("CRS") in the Cayman Islands, and that Financial Institutions would need to implement due diligence procedures from 1 January 2016 to determine the tax residency of all account holders. Pre-existing accounts will be those maintained on 31 December 2015 and new accounts would be those opened from 1 January 2016.
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.