Published 5th November 2013, 1:27pm
The Cayman Islands and the UK today signed a ‘FATCA’-type intergovernmental agreement (IGA), preparing the way for Cayman to automatically share financial information with the UK on UK taxpayers who hold Cayman Islands accounts.
Steps to establish the legislative and operational framework to implement the agreement are underway, and Government also intends to issue guidance to assist with the implementation, said Cayman’s Premier, the Hon. Alden McLaughlin.
‘Entering into this agreement with the UK builds on our shared history of cooperation in tax and transparency matters; furthermore, it strongly indicates our mutual support for a single, global standard for the automatic exchange of information’, he said.
The Premier pointed out that in September the G20 supported the OECD in presenting a single global standard for automatic information exchange by February 2014, and in finalising the technical implementation aspects by mid-2014.
‘While the pace of dialogue has quickened considerably in recent months, the acceptance of automatic exchange as the most effective way to combat tax evasion is the result of decades of global discussion regarding tax transparency’, he explained. ‘This approach also will minimise operational costs for governments and business’.
Cayman’s Minister of Financial Services, Wayne Panton, added that Cayman and the UK have agreed to monitor the outcomes of the IGA, in order to ensure that it remains effective against tax evasion, and that it also does not add undue compliance costs for financial institutions.
Under the IGA, financial institutions in Cayman will report information on financial accounts that are substantially owned by persons with UK tax-reporting obligations, to the Cayman Government. Cayman’s Government will then forward the information to the UK. Minister Panton also noted that the IGA contains details of the alternative reporting regime for UK resident non-domiciled individuals.
Signing the IGA on behalf of their governments were the Premier, and the Minister for Overseas Territories, Mark Simmonds. The IGA is available at http://tia.gov.ky/pdf/UK-Cayman_IGA_5_November_2013.pdf.
‘This is a momentous step forward in tax transparency, and a tribute to a close working relationship between the UK and the Cayman Islands', Minister Simmonds said. 'When we work together we can push the international agenda forward. I want to express my thanks for all the hard work put in by all concerned’.
UK Chancellor of the Exchequer, George Osborne, also welcomed the signing.
'The UK has led the way in creating a new global standard for tax transparency and automatic tax information sharing. This was at the heart of our G8 agenda this year, and today’s agreement builds on the progress we have already made.
'We welcome this signing with the Cayman Islands, the first Overseas Territory to sign this type of agreement with the UK', Mr Osbourne said. 'This demonstrates our shared commitment to tackling tax evasion.
'Alongside the significant investment that this Government has made in HMRC’s anti-avoidance and evasion work, these agreements will help them to clamp down further on those individuals who seek to hide their assets offshore. Our message is very clear: it is only fair that people pay the tax they owe. If you are trying to evade tax, we are coming after you'.
Cayman Finance also is pleased that the Government has reached this decision with the UK.
‘It reinforces our reputation as a well-regulated and transparent IFC’, said Cayman Finance CEO, Gonzalo Jalles. ‘We look forward to learning more about the details of this agreement, its implementation, and its reporting implications’, he added.
FATCA, or the Foreign Account Tax Compliance Act, began as a US tax-reporting initiative for US residents living overseas. The Cayman Islands Government expects to sign a Model 1 IGA with the US, to which the UK agreement is similar, in the very near future.