Cayman Islands: Proactive Guidance Needed To Help Entities Meet FATCA Deadlines

The first reporting cycle for the United States Foreign Account Tax Compliance Act (FATCA) kicked off with the 31 March deadline set by the US Internal Revenue Service's (IRS) for countries and territories such as Hong Kong that have a Model 2 Intergovernmental Agreement (IGA). Although the IRS has granted an automatic 90-day extension until 29 June for this first reporting cycle, many entities worked towards meeting the 31 March deadline.

Unable to enrol

One obstacle that clients encountered was the fact that an entity that applied for a global intermediary identification number (GIIN) in the beginning or middle of March were not able to enrol into the International Data Exchange Service (IDES) system due to the GIIN number not being recognized by the system. As confirmed with IDES technical support, this was because the GIIN has not been included in the IRS GIIN list, which is published on monthly basis.

The IDES web application is a secure managed file transfer service that is available to both financial institutions (FIs) and jost country tax authorities (HCTAs) to automatically exchange FATCA data with the US.

While several countries were proactive in setting up or adapting proprietary systems to accommodate FATCA reporting, or issued guidance to assist their FIs in complying with IRS requirements, many jurisdictions – including China, which has agreed in substance a Model 1 IGA – do not yet have systems or guidance in place. However, Model 1 countries must report to the IRS by 30 September.

Direct IDES reporting in Singapore

Singapore is not providing an online service or separate portal for manual input and reporting of FATCA data. Therefore, Singapore FIs have to transmit their FATCA reporting data in a specifically formatted XML data file directly to the IDES, and the Inland Revenue Authority of Singapore must approve the data before they are released to the IRS. FIs should be aware that XML data file reporting via IDES requires taking certain steps, including acquiring a digital certificate from an IRS-approved certificate authority, enrolling with IDES and preparing the FATCA reporting package for transmission. This process can take some time and requires IT knowledge, so it is important to get started immediately and not wait until the due date. Singapore's deadline is 31 July (extended from 31 May).

Nil returns

Other jurisdictions are using systems already in place. Ireland uses its Revenue On-Line Service which provides customers with a quick and secure facility to file tax returns, pay tax liabilities and access their tax details. However, the user also must obtain an approved digital certificate.

Mauritius provides MRA e-Services, which requires the FI to register with the Mauritius Revenue Authority (MRA). The MRA will provide a username and password upon registration and facilitate the exchange of tax information.

In Luxembourg the data transfer is executed via a secure channel using the transmitters Centel SA (via Sofie) or Fundsquare (via E-File). Both transmitters also require enrolment as well as obtaining a certificate.

All three jurisdictions require FIs to submit nil returns.

Automatic exchanges in Caymans

The Cayman Islands established a completely new system, the Cayman Automatic Exchange of Information Portal, for reporting financial institutions to submit their notification and reporting to the local Tax Information Authority (TIA).

Cayman FIs were required to provide notification to the TIA by 30 April. Notification should have been filed, even where the FI would be otherwise not required to submit a nil return given that filing a nil return is no longer mandatory in the Cayman Islands.

The notification should include an attachment in PDF format, on a standard business form such as a letterhead, identifying and authorizing a natural person, e.g. a named employee of a third-party service provider, as the principal point of contact for that FI.

Filling in the form

The form should be signed by a senior person, e.g. by a director or an officer responsible for FATCA. Information required on the form includes the FI's name, categorization in accordance with the US and UK IGA, GIIN, full name, address and designation of the authorized natural person.

As for FATCA, Cayman FIs have to comply with the 31 May deadline for electronic reporting via the portal to the Department of International Tax Compliance for each reportable account. XML is the prescribed format for the report, consistent with currently published schemas by the IRS for FATCA and the OECD for the common reporting standard.

BVI's reporting system

The British Virgin Islands International Tax Authority (BVI ITA) launched its Financial Account Reporting System for FATCA in mid-April, after delaying the reporting deadline for its FIs from 31 May to 30 June.

The system appears to be similar to that of the Cayman Islands, and it requires prior enrolment by FIs. The enrolment must be approved by the BVI ITA before access is given.

The enrolment process requires that FIs submit a letter signed by a director of the company identifying the person responsible for FATCA compliance – who must be a director of the FI – and a scanned copy of the primary user of the system's passport.

A way of life

It is becoming clear that jurisdictions still lagging on FATCA reporting systems or policies will eventually have to fall in line as more and more reporting deadlines become due throughout the year and FATCA becomes a way of life.

Originally published by China Business Law Journal.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions