Cayman Islands: Cayman Islands AEOI Update

Common Reporting Standard 

Extension to First Notification and Reporting Deadlines 

Financial Institutions ("FIs") in the Cayman Islands are required by law to notify the Cayman Islands Tax Information Authority ("TIA") of their AEOI status (i.e. register) by 30 April 2017.  In addition, Cayman Islands Reporting FIs ("Reporting FIs") are required to submit returns to the TIA by 31 May 2017.  However, the Cayman Islands governmental department mandated to assist the TIA, the Department for International Tax Cooperation ("DITC"), recently issued an industry advisory (the "Advisory") advising that it will be adopting a soft opening to the upcoming 30 April notification deadline and 31 May return deadline for CRS for 2017.  According to the Advisory, Cayman Islands FIs that submit notifications for CRS on or before 30 June 2017, and Cayman Islands Reporting FIs that file "Accepted" returns for CRS on or before 31 July 2017, will not be subject to any compliance measures or penalties. 

Updated Regulations and Draft Guidance Notes Issued to Industry 

As referred to in our previous update, in December 2016 the Cayman Islands passed the Cayman Islands Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2016 (the "CRS Amendment Regulations") which amend the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations, 2015 (the "CRS Principal Regulations" which as amended are referred to as the "CRS Regulations").  The CRS Regulations contain, amongst other things, the enforcement powers of the TIA and related penalty provisions. 

Version 2.0 of the Cayman Islands CRS Guidance Notes (the "Guidance Notes") is expected to be published by the DITC later this month following consultation with industry.  Maples and Calder is actively engaged in the consultation process.  A copy of the draft Guidance Notes (the "Draft GNs") issued to industry can be viewed here, with comments due to be provided direct to the DITC by 20 March 2017.

Some of the key provisions of the CRS Regulations and Draft GNs (which may be subject to further change) are as follows: 

(a)  Offences 

It is a strict liability offence under the CRS Regulations for any person to make a self-certification that is false in a material particular.  It does not matter if: (i) the self-certification was made outside of the Cayman Islands; (ii) the person did not know, or had reason to know, that the self-certification was false; or (iii) the self-certification was provided by someone else.  Defences are therefore limited to materiality (i.e. the particular in question is not material), factual mistake (i.e. if the defendant can prove that there was in fact no breach) or if the defendant can prove they had a reasonable excuse.  

An FI will also commit an offence if it: 

(i)  contravenes any obligation under the CRS Regulations; or

(ii)  provides to the TIA information that is materially inaccurate. 

Other offences under the CRS Regulations include: (i) hindering the TIA from performing a function under CRS; (ii) causing the TIA to breach its confidentiality obligations; or (iii) tampering with information in a way which causes another person to contravene the CRS Regulations.  

Criminal liability potentially extends to directors, officers, managers or secretaries (including members or partners in certain circumstances) of an FI unless they can demonstrate that they exercised reasonable diligence to prevent the contravention.  

(b)  Fine and Penalties 

The courts may impose fines of up to $50,000 for an offence by a body corporate or up to $20,000 for an offence by any other person (e.g. individuals).  The TIA also has powers to impose administrative penalties up to the same amounts and to impose daily penalties of $100 for continuing contraventions.  Unlike the Cayman legislation for US FATCA, the CRS Regulations do not give authority to the courts or the TIA to impose custodial sanctions.  

(c)  TIA Notification Obligation for all FIs 

It is now mandatory for all FIs (reporting and non-reporting) to notify the TIA of: (i) their CRS status and classification; (ii) details of the individual appointed as principal point of contact ("PPOC"); and (iii) details of a second individual who has authority to change the PPOC.  FIs that are classified as being non-reporting are required to notify the TIA of the relevant exemption under the CRS Regulations being relied upon.  

(d)  Nil Returns 

In a change to the previous position, a Reporting FI must now file nil returns via the Cayman AEOI Portal (the "Portal") prior to the applicable reporting deadline if it has no reportable accounts for reportable jurisdictions in respect of the previous year.  To simplify compliance, it is anticipated that such nil returns will be filed using a single check box via the Portal. 

Non-Reporting FIs are not required to file any returns with the TIA. 

(e)  Policies and Procedures 

Reporting FIs must now adopt and implement written policies and procedures setting out how the Reporting FI will address its obligations under CRS.  The Draft GNs provide that such policies and procedures must be appropriate for the type of institution, and should reflect any delegation to third party service providers (if appropriate), which are still permitted under CRS.  An FI that has decided to delegate its CRS obligations should still have written policies and procedures which describe: (i) what functions have been delegated; (ii) the management/oversight of the delegation; and (iii) the performance of any CRS obligations that have not been delegated. 

(f)  US Retirement and Pension Funds 

The Draft GNs contain a placeholder with regard to the treatment of US retirement and pension funds constituted as trusts.  This reflects an understanding by the DITC that, if such entities are treated as Passive NFEs on the basis of being managed investment entities in a non-participating jurisdiction, the required due diligence burden is likely to be excessive as such pension funds are likely to have a significant number of account holders but few, if any, reportable person account holders.  While the official position with regard to such entities has yet to be announced, the DITC continues to engage the OECD on this point. 

(g)  Dormant or Liquidating Entities 

Unlike the position regarding US FATCA, the Draft GNs provide that an Investment Entity does not cease to be classified as such for the purposes of the CRS Regulations, if it is either closed or in liquidation.  Accordingly, CRS notification and reporting requirements continue to the point of liquidation or dissolution.  Relevant records in respect of the dissolved entity must be maintained for six years following the relevant liquidation or dissolution.  The DITC has indicated in the Draft GNs that it does not expect FIs to register on, or report through, the Portal, where they have been dissolved or wound up prior to the Portal becoming available for registration or reporting.  However, liquidators will still be required to maintain a liquidated entity's CRS records for six years after liquidation in order to respond to a TIA request for information. 

(h)  Limited Life Debt Investment Entities 

The DITC understands that the OECD has determined that Limited Life Debt Investment Entities ("LLDIEs") should not be regarded as jurisdiction specific low-risk non-reporting FIs.  Accordingly, pursuant to the Draft GNs, that non-reporting category has been removed, so any LLDIE that may previously have been relying upon such status will likely now be considered a Reportable FI (investment entity).  The CRS Regulations will also need to be amended to reflect this change in treatment.  This means LLDIEs are treated differently under US FATCA and CRS. 

(i)  Self-Certification Forms 

It is expected that the DITC will publish updated Entity and Individual Self-Certification Forms for use by industry going forward to reflect the latest position under the CRS Regulations and Guidance Notes. 

US FATCA

The notification and return deadlines for US FATCA are 30 April 2017 and 31 May 2017 respectively.  The DITC confirmed in the Advisory that there will be no deferral of these deadlines for US FATCA in 2017. 

Clients are reminded that compliance with US FATCA is mandatory under Cayman Islands law for all Reporting FIs and is not contingent upon having US account holders or US situs assets.  Cayman Islands law requires all such Reporting FIs to register both with the US Internal Revenue Service for a Global Intermediary Identification Number and with the Cayman Islands TIA.  The DITC has noted that more Cayman Reporting FIs have registered with the IRS than with the TIA so clients are reminded to check that both registrations have been completed. 

UK CDOT

The Advisory states that Reporting FIs will not have notification or reporting obligations regarding UK CDOT this year onwards because those obligations are superseded by the corresponding obligations under CRS (i.e. any reporting that would otherwise have been required in respect of Account Holders and Controlling Persons who are Specified UK Persons under UK CDOT must now be made in respect of those persons who are Reportable Persons for CRS purposes on the basis of their UK residence).  The Draft GNs similarly state that notification and reporting by FIs pursuant to CRS requirements will satisfy compliance with UK CDOT requirements.  The Alternative Reporting Regime under UK CDOT is not recognised under CRS and will not be continued.

Cayman Islands AEOI Update

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
Similar Articles
Relevancy Powered by MondaqAI
 
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
 
Similar Articles
Relevancy Powered by MondaqAI
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