Unless otherwise stated, capitalised terms used herein shall have the meaning given to them in prior updates.
FATCA Notification and Reporting Deadlines Extended
The Cayman Islands Department for International Tax Cooperation ("DITC") has issued an industry advisory advising that it will be adopting a soft approach to the upcoming 30 April notification deadline for US and UK FATCA and 31 May reporting deadline for both US and UK FATCA for 2016.
According to the advisory, Cayman Islands reporting financial institutions that submit notifications for US and UK FATCA to the DITC on or before Friday, 10 June 2016, and file returns for both US and UK FATCA on or before Friday, 8 July 2016, will not attract any adverse consequences or enforcement measures.
The advisory confirms that the soft approach to enforcement of the notification and reporting deadlines for 2016 is in recognition of the first year of compliance for UK FATCA and the recent lack of availability of the AEOI Portal, of which an updated version of the AEOI Portal User Guide has been recently posted on the DITC website.
Common Reporting Standard – Ongoing Due Diligence Obligations
As noted in our prior update of 10 December 2015, the requirements of CRS became operative in the Cayman Islands from 1 January 2016, therefore any account opened in a Cayman Islands reporting financial institution from this date is subject to new account due diligence procedures (including the account holder providing a self-certification as to tax residency) and any account opened before such date is subject to pre-existing account due diligence procedures to identify reportable accounts. Clients are reminded that the due diligence on pre-existing high value individual accounts needs to be completed by the end of this year. CRS reporting in 2017 will therefore cover all high value individual accounts that were pre-existing as of 31 December 2015 and all new accounts opened from 1 January 2016 onwards.
UK FATCA Alternative Reporting Regime
The Alternative Reporting Regime ("ARR") will only be available for a limited period of time under UK FATCA (before the transition to CRS in 2017) and therefore the DITC will be accepting ARR reporting via an agreed "ARR Election Template",1 which Financial Institutions may use to provide details of any account holder who has made an election for the ARR, subject to receipt by such Cayman Islands reporting financial institution of a valid self-certification and verification of the account holder's UK Resident Non-Domiciled status.
It is now anticipated that the DITC will issue CRS guidance notes in Q2 2016. As per our prior update of 10 December 2015 (see footnote 3), these shall be limited to practical aspects of CRS that are specific to Cayman.
For further information or advice on the application of FATCA or CRS, please liaise with your usual Maples and Calder or MaplesFS contact, or any one of our AEOI experts listed above or on our dedicated FATCA and CRS webpage.
1 Further particulars can be provided on request.
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.