Another round of International Tax Compliance Required under the OECD's Common Reporting Standard
The Cayman Islands Department of International Tax Compliance (DITC) has notified Cayman financial institutions of its intention to move forward with implementing the OECD's Common Reporting Standard (CRS), with the introduction of local regulations by October 2015.
The Cayman Islands is among 50 "early adopters" of the CRS that will begin the automatic exchange of tax information starting in 2017. Eleven other countries will start tax information exchange in 2018.
Under the CRS, as of September 2017, tax authorities in over 50 jurisdictions - in addition to the U.S. and U.K. - will be entitled to information on accounts that individuals or entities hold in a Reportable Jurisdiction, under the tax laws of that jurisdiction.
A Reportable Jurisdiction is one that has a multilateral or bilateral Competent Authority Agreement with other jurisdictions to provide information under the CRS and is on the OECD's list of such jurisdictions.
This DMS Alert reminds stakeholders that all Cayman Islands investment funds/financial institutions should now take steps to prepare for reporting and other obligations under the CRS.
What should you do?
- All accounts that exist on December 31, 2015 will be treated as pre-existing accounts and must be documented as such.
- Implement new account opening procedures as of January 1, 2016.
- Perform due diligence on accounts, starting in 2016. Due diligence procedures for identifying high-value pre-existing individual accounts should be completed by December 31, 2016. For low-value pre-existing individual accounts and for entity accounts due diligence should be completed by December 31, 2017.
- Implement any administrative and/or IT systems development necessary for full compliance. Stay abreast of developments on the Cayman Islands Tax Information Authority's (TIA) Tax Information Assistance website regarding CRS and other international tax compliance obligations.
Dates to Note:
- January 1, 2016: CRS takes effect. New investor onboarding procedures should be in place. Reporting Financial Institutions (RFIs) will be required to provide self-certification regarding tax residency.
- April 30, 2017: Anticipated deadline when RFIs are required to provide notification regarding their CRS reporting status to the Tax Information Authority.
- May 31, 2017: First reporting deadline to the DITC with respect to relevant Reportable Accounts under CRS.
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.