Deadlines for Cayman Islands Financial Institutions ("CFI") to comply with U.S. FATCA and Common Reporting Standards ("CRS") are just around the corner. The following obligations are required under the regulations to avoid penalties:
- notification for FATCA and CRS has just been EXTENDED to 31 July 2017 (applies to both Reporting Financial Institutions ("CRFI") and Non-Reporting Financial Institutions ("NRFI"))
- reporting for FATCA and CRS remains 31 July 2017 (includes Nil Return filing requirement for CRS)
The Department for International Tax Cooperation ("DITC") recently released Version 2.0 of the Common Reporting Standard ("CRS") Guidance Notes. We have set out below the significant points to note for RFIs and NRFIs to ensure compliance under this directive.
CRS Entity Classification
Importantly, entities should be paying close attention to classification under the CRS regulations as certain entities such as General Partners, Investment Managers or Investment Advisors may fall into scope as CRFIs for CRS purposes which may not be deemed as reporting entities for U.S. FATCA.
Appoint a Principal Point of Contact (PPOC) and Authorized Person
All Financial Institutions, RFIs and NRFIs are required to notify the Tax Information Authority ("TIA") of both a Principal Point of Contact ("PPOC") and an individual who is authorized to notify the TIA of any change in the PPOC or the notification. This notification has just been EXTENDED to 31 July 2017 which includes a letter of authorization signed by a Director / General Partner / Trustee of the Financial Institution.
Written Policies and Procedures
CRS requires CRFIs to establish and maintain written policies and procedures on how to comply with the Cayman Islands CRS Regulations as well as how to implement and comply with these policies and procedures. The written policies and procedures established and maintained by the RFI should address the obligations regarding due diligence, record keeping, notification and reporting to the TIA via the Cayman AEOI Portal as well as information regarding any delegation of CRS obligations, including the appointment of any third parties, and cooperation with the TIA's compliance measures.
Corrections of Prior Period Reports
The deadline for correcting any errors in FATCA reports for 2014 and/or 2015 is also 31 July 2017. The DITC's will provide further guidance on the corrections required for certain types of FATCA reporting errors.
The IRS has been in active communications with those listed as the Responsible Officer on the IRS portal as it relates to action for renewal of FFI agreements under U.S. FATCA. Despite the fact that a renewal is not a requirement for entities in a Model 1 jurisdiction, there may still be action required to validate the FFI agreement status through the IRS alert messaged received. FATCA Responsible Officers should pay close attention to any such messages to avoid revocation of GIIN registration and the FFI Agreement.
How the DMS International Tax Compliance Group can help
As a leading provider of International Tax Compliance ("ITC") services, DMS has been at the forefront of discussions with managers across the U.S., Europe and Asia on how best to comply with the increased volume and responsibility of CRS and FATCA reporting. With CRS filings due for the first time across fifty four countries, we have specifically seen strong interest from our global client base in delegating the AEOI function to a third party that has the resources and expertise to ensure full compliance. As the filing deadlines approach, the DMS ITC team would welcome the opportunity to further discuss our ITC solutions and any new requirements you may have.
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.