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.
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.
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On September 30, 2016, the VAT authorities confirmed that VAT shall apply to directors' fees.
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