Further to the issue of the Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations, 2017 (the "CbCR Regulations") on 15 December 2017 and our previous client update, the Department for International Tax Cooperation ("DITC") has made further announcements with respect to the CbCR Regulations pursuant to an industry advisory (the "Industry Advisory") dated 2 February 2018. Key points of the Industry Advisory, including the extension of certain notification and reporting deadlines, are set out below.
Preparations for Notification and Reporting on the CbCR Portal
The DITC has confirmed that every entity that is "resident in the Islands" must determine whether or not it is a Constituent Entity ("CE") of a multinational enterprise group ("MNE Group")1 for the purposes of the CbCR Regulations.
The DITC has confirmed that it only requires a single notification to be made for all CEs "resident in the Islands"2 that are in the same MNE Group. It should be noted that the CbCR Regulations provide that an entity may fall within the definition of "resident in the Islands" even where it is incorporated or formed outside of the Cayman Islands if it has a place of effective management in the Cayman Islands or is subject to financial supervision in the Cayman Islands.
Notification on the CbCR Portal
For CEs that are required to file a Country-by-Country Report ("CbC Report") (including an Ultimate Parent Entity or Surrogate Parent Entity) (each, a "Reporting Entity"), the notification deadline with respect to fiscal years beginning on or after 1 January 2016 has been extended to (a) 15 May 2018 if the Reporting Entity is resident in the Islands and (b) 30 September 2018 if the Reporting Entity is not resident in the Islands.
The Industry Advisory confirms that a Primary Contact (which may be an agent of the Reporting Entity) and a Secondary Contact (which must be a fiduciary or management level employee of the Reporting Entity) must be appointed by a Reporting Entity of an MNE Group. The Industry Advisory has clarified that the Primary Contact and the Secondary Contact need not be resident in the Islands.
The deadline for filing a CbC Report for Reporting Entities with fiscal years that began from 1 January 2016 to 1 June 2016 has been extended to 31 May 2018.3
The CbC Report must be made via the CbCR Portal by uploading an XML file in the format prescribed by the OECD.
The DITC has confirmed that CbC Reports will need to be filed under the CbCR Regulations even if a CbC Report for that MNE Group has already been filed with an authority in another participating jurisdiction.
The Industry Advisory also includes a summary of the penalties in place in relation to the CbCR Regulations, including: (a) a penalty for failure to comply with filing requirements; (b) a daily default penalty; and (c) penalties for inaccurate information.
CbCR Guidance and CbCR Portal
The publication of the CbCR Guidance and the launch of the Cayman Islands CbCR Portal by the DITC are expected in early March 2018 and a further client update will be issued at that time.
For further information or advice on the CbCR Regulations please contact any of the persons listed above or your usual Maples and Calder or MaplesFS contact.
1 Please see our previous client update for a definition of "MNE Group"
2 Please see our previous client update for a definition of "resident in the Islands"
3 The deadline was previously 31 March 2018 for reporting fiscal years that began on or after 1 January 2016 but before 31 March 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.