Guidance Notes on the International Tax Compliance Requirements of the Intergovernmental Agreements between the Cayman Islands and the United States of America and the United Kingdom, Version 1.0.

On 22 July 2014, the Cayman Islands (‘Cayman’) Tax Information Authority (‘TIA’) issued the first version of its Guidance Notes to accompany the recent amendments made to Cayman TIA legislation and the new regulations introduced for the international automatic exchange of information (‘AEOI’) for tax purposes.

USA IGA

From 1 July 2014 Cayman Islands (‘Cayman’) Financial Institutions (‘FI’s) need to apply due diligence procedures to all new reportable accounts under the United States (‘US’) Foreign Account Tax Compliance Act (‘FATCA’) pursuant to the Model 1 Intergovernmental Agreement (‘IGA’) between Cayman and the US and the IGA between Cayman and the United Kingdom (‘UK’). To allow the TIA to conduct the AEOI for tax purposes, and to implement the AEOI provisions of the US and UK IGAs, on 4 July 2014 Cayman gazetted amendments to its TIA legislation and introduced new regulations.

Updated legislation

The amendment to the TIA Law was designed to facilitate AEOI for tax purposes under both FATCA and the new Common Reporting Standard (‘CRS’) of the Organisation for Economic Co-operation and Development.

Regulations

The new regulations bring the obligations under the terms of Cayman’s IGAs with the US and the UK into force in Cayman domestic law, and remove confidentiality restrictions to allow FIs to provide tax information to the Cayman Tax Information Authority.

Guidance Notes

The Guidance Notes (the ‘Notes’) were issued by the TIA as the competent authority for international exchange of information for tax purposes, in accordance with powers conferred by regulations. They are a key component of Cayman’s AEOI and are provided to give practical assistance to businesses and their advisers in dealing with the application of the IGAs and related Cayman legislation. The Notes run to over 200 pages but whilst they are intended as a practical guide, they are not legal advice. FIs needing assistance to understand their reporting obligations should seek professional advice.

Version 1.0

The Notes were prepared by the Cayman Islands FATCA Working Group, comprising both private and public-sector representatives and following consultation with representatives from the financial services industry. A first draft of the Notes was circulated for industry comments in May 2014. Following a highly productive consultation period and further input from industry, the FATCA Working Group has completed the current version, ‘1.0’. The TIA is asking the financial services industry to raise comments and valid suggestions with either the Department for Financial Services Policy and Legislation, or the Department for International Tax Cooperation as practical issues arise from the use of the current version of the Notes. These may then be raised with the FATCA Working Group which will address outstanding issues and further comments, with a view to issuing a second iteration of the Notes in the fourth quarter of 2014.

Solomon Harris

If you would like advice on the Guidance Notes, the amendments to the TIA Law, the new Regulations, the new self-certification forms, or any other issue on FATCA compliance pursuant to the US and UK IGAs or the effect of the CRS, please email or phone your usual Solomon Harris contact.

For further information on the TIA Law and CRS, please see our earlier updates –

For further information see our earlier updates:

FATCA: Cayman Ministry of Finance releases Guidance Notes for consultation

FATCA Goes Live: Cayman Islands

FATCA: the Cayman Islands Government takes another step forward

Cayman part of the Early Adopter Group for the OECD’s CRS

Source: http://www.solomonharris.com/news-updates/fatca-update-cayman-islands-tia-issues-guidance-notes