With the first round of US Fatca reporting completed on Friday,
26 June, Cayman Islands Reporting Financial Institutions (RFIs) can
now begin their summer relaxation in earnest, having successfully
navigated the complex notification and reporting processes.
many, the process has been all-consuming since 1 January, when
Fatca went live, after the US IRS itself had allowed a few
implementation delays to enable the global financial industry to
catch up on the requirements of the law and to demonstrate good
faith efforts in complying.
In March 2015, the Cayman Islands Department for International
Tax Co-operation (DITC) announced that it would be launching its
Automatic Exchange of Information Portal, thereby putting RFIs on
alert to begin their notification and reporting under Fatca and the
Intergovernmental Agreements (IGAs). The DITC also announced the
extension of the deadlines for notification of Fatca obligations,
from March 31 to 30 April, with the reporting deadline set at 31
With technical difficulties besetting the portal in the early
stages (it was pulled offline 11-13 May for system updates), the
DITC was again forced to twice delay both the notification and
reporting deadline. On 11 May, the DITC announced that
notifications should be submitted on or before 21 May, and returns
should be reported on or before 12 June. Again on 21 May, the
notification and reporting deadlines were shifted to 29 May and 26
BVI has also had "technical problems" with its Fatca
portal. Enrolment applications via the BVI Financial Account
Reporting System (BVIFARS) was delayed from the original date of 1
June to 30 June and the Fatca reporting deadline was also changed
from 30 June to 31 July.
Luxembourg, Ireland and Singapore also extended their Fatca
reporting deadlines to 31 July for this first year reporting. For
the Cayman Islands, the teething pains appear to have been
resolved, and the final reporting process was completed
It has been evident in the past few months that many questions
still remain about Fatca, particularly among investors with respect
to deadlines, due diligence and reporting/notification. These
points need on-going education, even beyond the reporting
deadlines. Anecdotally, due diligence is still a problem for some
fund managers and even some service providers, who still struggle
to understand and comply with the necessary documentation that
should be submitted.
A key remaining responsibility at the end of this first
reporting period is for RFIs and their service providers to pay
attention to how they are retaining and storing the documents and
records of the information subject to reporting under the IGA. Th
is must be stored for a period of six years and should be available
to the Tax Information Authority (TIA), in the event of any
regulatory inspection or other action.
The respite from Fatca reporting will last only just beyond
these summer months. Reporting and notification for UK Fatca begins
in 2016, when RFIs must provide information on any UK taxpayers to
the TIA. Under the Cayman UK Fatca, completion of due diligence on
pre-existing "high-value individual investor" accounts
should have already taken place (by the end of June 2015),
preparing the way for RFIs to meet their first UK Fatca reports in
time for the 31 May 2016 deadline for the years 2014 and 2015.
There is more international tax compliance to be accomplished by
year end, with the OECD's Common Reporting Standard (CRS) set
to take effect in 2016, which requires that financial institutions
report on accounts that individuals and entities hold in
jurisdictions that have signed on to the CRS, under their
The Cayman Islands DITC recently signaled its intention to
introduce local legislation to implement the CRS by October of this
year. By 1 January 2016, new account opening procedures must be in
place to record the tax residence of account holders. Cayman RFIs
must document all account holders existing on 31 December. It is
expected that the deadline for CRS notification to the TIA will be
30 April 2017 and first reporting will be required by 31 May
Originally published in HFM Compliance on July 2,
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guide to the subject matter. Specialist advice should be sought
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On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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