It's time for another round of international tax cooperation
in the Cayman Islands, and now government leaders are turning their
attention to what comes next, implementing the OECD's Common
Reporting Standard (CRS). The Cayman Islands Department for
International Tax Compliance (DITC) has noticed local financial
institutions of the next step and said the regulations to bring the
CRS into force will be take place later this year.
More than 90 jurisdictions around the world have committed to
the implementation of the common reporting standard to agreed
timetables. Under the CRS, tax authorities in over 50
jurisdictions will be entitled to information on accounts that
individuals or entities hold in a Reportable Jurisdiction, under
the tax laws of that jurisdiction. At this time, Cayman has signed
on as "early adopters" and is committed to
undertaking the first AEOI exchanges under the CRS by 2017.
The CRS is a set of global standards for the annual exchange of
financial information by financial institutions (FI's)
pertaining to customers to the tax authorities of the jurisdiction
in which those customers are resident for tax purposes. Like FATCA,
the CRS will require FI's around the globe to play a central
role in providing tax authorities with greater access and insight
into taxpayer financial account data including the income earned in
DMS officials are also reminding stakeholders that all Cayman
Islands investment funds/financial institutions should now take
steps to prepare for reporting and other obligations under the CRS.
Executive Director and Business Unit Leader of the
DMS International Tax Compliance Group, Kevin Phillip,
told CNS Business, due to the number of jurisdictions implementing
CRS, "that means increased compliance and increased work for
all fund administrators, service providers and even the Tax
Information Authority (TIA). Also given this increase, we expect
that each fund may have multiple reportable accounts."
Until then, Phillip stated, what fund stakeholders should keep
in mind, such as administrators, service providers, investment
managers, is to keep their on-boarding documents updated.
"Funds need to unitize their boards in conjunction with
managers to update sub docs for US FATCA, UK FATCA and CRS so that
when the guidance notes are released, we'll have the
information ready to complete all the necessary requirements by the
deadlines," he explained. Phillip added, "We expect that
Guidance Notes will follow the regulations, and that will tell us
where there are similarities or differences with US FATCA or UK
FATCA," he said.
The DMS Business Unit Leader explained the CRS will also mean
wider regulatory and compliance exposure because whereas with US
and UK FATCA you deal only with the IRS and HMRC, with CRS there
will be multiple tax authorities that will be able to ask questions
and scrutinize the investor base of reporting funds.
"There are a lot of 'ifs' until the guidance notes
are released. We expect the notes will be similar to US and UK
FATCA but as history has shown, we need to be prepared for changes
and increased reporting requirements by having updated documents on
file," he stated.
Financial Services Minister Wayne Panton said the CRS will
further strengthen Cayman's already-recognised participation in
the international stance to improve tax compliance.
"The CRS is an important progression in ensuring
international tax compliance, across country borders", he
explained. "By implementing it via the enactment of local
regulations, Cayman continues to show our full participation and
strength, as a member of the growing network of countries worldwide
that engage in international tax cooperation."
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Investment funds with high net worth individuals as investors will need to have a client agreement with their high net worth investors.
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