Further to our previous CRS advisories, the Cayman Islands Department for International Tax Cooperation ("DITC") has issued an updated industry advisory on the implementation of the CRS in the Islands. Implementation has been effective from 1 January 2016 with reporting to the Cayman Islands Tax Information Authority ("TIA") (which falls under the DITC) to begin at the end of May 2017.
A link to the advisory can be found by clicking here.
CRS participating jurisdictions and US FATCA
The industry advisory contains a link to the TIA's list of CRS participating jurisdictions which now numbers 96. This list of countries notably excludes the USA and the advisory confirmed that the USA is a non-participating CRS jurisdiction and, as such, the US FATCA legislative framework implemented in the Cayman Islands will continue to operate as normal.
US FATCA was implemented in the Cayman Islands through a non-reciprocal intergovernmental agreement (an "IGA") signed in November 2013 between the US and the Cayman Islands with the TIA's first data transmissions to the US internal Revenue Service taking place in September 2015.
Updated Self-Certification Forms
The advisory attaches updated templates of the "Entity Self–Certification Form" and the "Individual Self-Certification Form" which have been amended to reflect CRS by the Cayman Islands FATCA/CRS Working Group. Links to such templates can be found on the advisory at the above link.
Notably the advisory stated that these self-certifications should be obtained for all new accountsfrom1 January2016. The validation of the self-certification forms should be carried out as quickly as possible but it is permitted to be completed within 90 days of account opening.
Non-Reporting Financial Institution List
The TIA has stated that the only entity excluded from CRS reporting is a Limited Life Debt Investment Entities ("LLDIEs") in existence on or before 17 January 2013. The definition of an LLDIE is also at the above link.
UK FATCA – Transition to CRS
UK FATCA was implemented in the Cayman Islands by an IGA between the Cayman Islands and the UK in November 2013 (the "UK IGA"). However, the UK is now a CRS participating jurisdiction and is transitioning to CRS. The UK has indicated that for 2016 Cayman Islands Financial Institutions will need to comply with both the UK IGA and CRS. The advisory confirmed that UK FATCA would be phased out by 2017.
The method of reporting for UK FATCA and CRS will be advised by the Cayman Islands Government in due course.
CRS Regulations and Guidance
As previously advised, Cayman Islands specific guidance notes on CRS will be published in the first quarter of 2016. Such guidance will be limited to practical aspects of the CRS which are specific to Cayman as many issues are addressed on the OECD's official CRS commentaries which can be found on the OECD's automatic exchange portal which gives comprehensive information about the OECD and tax transparency, a link to which can be found here.
The second tranche of CRS Regulations addressing compliance and enforcement is expected in the first quarter of 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.