Representing a significant development in the Cayman Islands' transparency framework, the OECD/Council of Europe Convention on Mutual Assistance in Tax Matters has been extended to the jurisdiction, and will become effective on 1 January 2014.
The UK is a party to the convention and, in accordance with legal requirements, Cayman must formally request that the UK extend the convention to this jurisdiction. The formal request was made in August, said the Minister of Financial Services, Wayne Panton.
'For the continued vitality and growth of Cayman's industry, it's an advantage to remain aligned with global movements in the direction of automatic exchange of information', Mr Panton said, noting that more than 50 countries currently adhere to the convention.
The convention is a multilateral instrument, designed to combat tax evasion and aggressive tax avoidance by allowing member states to assist each other in tax matters. Administrative assistance can range from the exchange of information for tax purposes, to the serving of documents.
With international instruments, it is common to allow signatory countries to opt out of certain aspects. Regarding the OECD/Council of Europe convention, Cayman will not handle matters related to requests for the recovery of foreign tax claims, or exchange of information regarding local taxes, and social security contributions. The convention does not allow countries to opt out of core elements regarding the exchange of tax information.
Recent milestones of Cayman's cooperation in global tax and transparency matters include agreeing to participate in the G5 pilot on multilateral automatic exchange of information; and the publishing, immediately following the June G8 Summit, of an action plan on the misuse of companies and other legal structures, which includes provisions on beneficial ownership.
To date, Cayman also has signed tax information exchange agreements with 31 jurisdictions, and negotiations are either completed, or underway, with a further 18 jurisdictions. Today, the Cayman Islands also was the first Overseas Territory to sign a FATCA-style intergovernmental agreement with the UK for automatic exchange of information for tax purposes.
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at firstname.lastname@example.org.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.