The Cayman Islands government, on October 20 2015, advised that the CRS regulations are now in force and are a key component of Cayman's implementation of automatic exchange of financial account information in accordance with the internationally agreed standard.
The Cayman Islands government announcement also advised that further parts of the regulations, addressing compliance, will be issued in December 2015. These may include details regarding penalties for non-compliance.
The Cayman Islands Working Group is also considering questions regarding guidance and self-certification forms at this time, although guidance is not expected to be extensive. Guidance will address any particular local issues.
Timeline for CRS Implementation in 'Early Adopter' Jurisdictions
What does CRS Mean for Reporting Financial Institutions?
CRS is far-reaching in scope and requires compliance in 2016 and exchange of information initially in 2017, between 50+ 'early adopter' countries and by 2018 between 90+ countries.
Please see the list of more than 90 countries that have committed to implement the CRS including the 61 countries that have already signed the Multilateral Competent Authority Agreement to facilitate the information exchange.
A Reporting Financial Institution (RFI) should establish policies and maintain procedures designed to identify Reportable Accounts. RFIs will report to their local tax authorities, which will share the information with tax authorities in partner jurisdictions.
RFIs should now take note of some these requirements, under the regulations:
Any RFI that has reporting obligations under the Regulations shall notify the TIA to that effect.
When notifying the TIA, the RFI should provide the following information:
- Categorization of the RFI as determined in accordance with the CRS, and
- Principal Point of Contact
RFIs will be required to provide notification no later than 30th April in the first calendar year in which it is required to comply with reporting obligations under these Regulations, which means for the first reporting year 2016, the deadline for notification will be 30 April 2017. Reporting will be required on or before 31 May 2017.
If the RFI maintains no Reportable Accounts, it will not be required to file a return but may, at its own option, do so in accordance with the regulations.
Steps to Take
- Financial Institutions should first familiarize themselves with the CRS and its commentaries.
- They should conduct due diligence to determine the tax status and residence of their account holders.
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.