Cayman and the US Sign FATCA Agreement
Published 29th November 2013, 11:34am
George Town, Grand Cayman Ė Building on more than a decade of cooperation in tax matters, the Cayman Islands and the US today signed an agreement that paves the way for automatic exchange of tax information under US FATCA.
The two governments also signed a new tax information exchange agreement (TIEA), which replaces the original TIEA signed in 2001. The new TIEA stipulates the legal channels through which information will be automatically exchanged.
FATCA, or the Foreign Account Tax Compliance Act, is a US tax-reporting initiative, developed to assist the US Internal Revenue Service in preventing tax evasion by US persons living overseas. Cayman has signed a FATCA Model 1 intergovernmental agreement (IGA); this enables financial institutions in Cayman to directly report information to Caymanís Government regarding accounts and non-financial entities that substantially are owned by US citizens and residents. Government will then relay the information to the IRS.
The signing was held in London, immediately after Cayman officials participated in the UKís Joint Ministerial Council of Overseas Territories. Signing the documents were Caymanís Minister of Financial Services, Wayne Panton; and the US Embassy in Londonís Minister-Counselor for Economic Affairs, Julie Nutter.
ĎBy working together to detect, deter, and discourage offshore tax abuses through increased transparency and enhanced reporting, we can help build a stronger, more stable, and accountable global financial systemí, Ms Nutter said. ĎWe look forward to collaborating with the Government of the Cayman Islands to further these objectivesí.
Minister Panton acknowledged the support of Caymanís financial services industry in deciding that a Model 1 IGA was the best option for Government to pursue. The second option for a FATCA IGA, known as Model 2, requires financial institutions to report directly to the IRS.
ĎWith a Model 1 IGA, Governmentís Tax Information Authority will implement the standardised data-reporting framework for FATCAí, he explained. ĎThis should help to defray administrative costs for financial institutionsí.
Minister Panton also noted that the FATCA Model 1 IGA is poised to become the global standard for multilateral automatic exchange.
ĎSigning these agreements clearly demonstrates that both Cayman and the US are committed to the stability and growth of global financial services, which contributes to stability in our countryís economies and increased opportunities for our peopleí, he said.
Gonzalo Jalles, CEO of industry group Cayman Finance, noted that FATCA requires financial institutions to register with the US Treasury and, in accordance with the IGA, agree to report certain information about their account holders. Treasury will open the registry portal this January.
ĎIndustry is pleased that Government consulted them on which IGA to pursue, and that our recommendation for a Model 1 was accepted,í he said. ĎWe look forward to seeing the final IGA, as industry continues to prepare for the FATCA implementation processí.
As part of that process, Mr Jalles said that Cayman Finance, in collaboration with the Ministry of Financial Services, has organised a full dayís seminar in January to cover the registration process in detail, along with other international taxation topics. Furthermore, Minister Panton said that Government is setting up a working group to handle the detailed legislative framework and implementation matters.
In addition to US FATCA, on 5 November Cayman signed a FATCA-type agreement with UK. This implements a reporting mechanism to automatically share financial information with the UK, on UK taxpayers who hold Cayman Islands accounts.To review the FATCA Model 1 IGA between Cayman and the US, visit http://tia.gov.ky/pdf/USA-Cayman_FATCA_-_29_November_2013.pdf. To review the TIEA, visit http://tia.gov.ky/pdf/Agreement_-_USA_-_29_November_2013.pdf.
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at firstname.lastname@example.org.