Most Read Contributor in Cayman Islands, September 2016
The Cayman Islands Government (CIG) today announced that it has
concluded negotiations with the United States on a Model 1
intergovernmental agreement (IGA), and a new tax information
exchange agreement (TIEA).
The agreements pave the way for automatic exchange of
information (AEOI) under the US Foreign Account Tax Compliance Act
Both governments have initialled the agreements, to indicate
their intent to sign them; they also have noted that the official
signing will be held as soon as possible, after which the texts
will be publicly available.
The benefits of the Model 1 IGA for foreign financial
institutions in the Cayman Islands is that it will streamline,
through the CIG, the reporting of information regarding accounts
and non-financial entities substantially owned by United States
citizens and residents. The CIG will then relay the information to
the U.S. Internal Revenue Service.
Industry also will benefit from CIG managing the implementation
of a standardised framework for the reporting of data, as the FATCA
model is likely to be adopted as a broader template for
multilateral AEOI in the future. Having a standard mechanism for
reporting to Cayman's Tax Information Authority, which is the
sole channel in the Cayman Islands for the provision of tax-related
information to other governments, is likely to reduce the
administrative costs that would result from foreign financial
institutions (FFIs) having to collect and transmit data to other
governments on their own.
Cayman's Minister for Financial Services Wayne Panton said
that CIG is pleased to have arrived at this milestone, which
recognises that the global community is moving in the direction of
one AEOI standard for tax purposes.
'As an international financial centre (IFC) that contributes
to the efficient functioning of global markets, the initialling and
subsequent signing of the IGA and new TIEA with the United States
will again demonstrate Cayman's commitment to engage in
globally accepted tax and transparency initiatives', he
Minister Panton thanked the CIG officials who were involved in
the discussions, as well as members of Cayman's financial
services industry who provided assistance and input into the
decision to adopt a Model 1 IGA.
U.S. Treasury Deputy Assistant Secretary (International Tax
Affairs) Robert Stack said the Model 1 IGA and new TIEA will
effectively combat tax evasion and improve compliance through
increased transparency, mutual cooperation, and the automatic
exchange of information.
'Cayman has had a longstanding relationship with the United
States regarding the exchange of tax information, dating back to
the original TIEA that was signed in 2001', Mr Stack said.
'Cayman also consistently demonstrates leadership in
transparency matters through its global engagement, including its
work on both the Steering Group and the Peer Review Group of the
OECD Global Forum on Transparency and Exchange of Information for
Tax Purposes. We are especially pleased that the conclusion
of an IGA will provide certainty to Cayman's significant fund
industry with respect to FATCA implementation'.
Cayman Finance, the group that represents the country's
financial services industry, applauded Government for its efforts
in bringing the dialogue to this stage.
'This has clarified the way forward, in order for industry
to progress with the implementation', said Cayman Finance CEO
Gonzalo Jalles. 'We are particularly thankful to Government for
including Cayman Finance and the broader industry in the
consultation process, and commend them for ensuring that we remain
a well regulated and transparent IFC'.
Following the signing with the United States, the CIG
will have further discussions with the UK's
HM Treasury in order to finalise the terms of the UK
Model 1 IGA FATCA agreement.
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