CF_Mag_2015_web-V2

34 Cayman. Moving finance forward.
What is FATCA?
FATCA refers to US legislation
more fully known as the Foreign
Account Tax Compliance Act and
includes the US Treasury regulations
implementing it. It was enacted
as part of the Hiring Incentives to
Restore Employment Act of 2010
(otherwise known as the, “HIRE
Act”) on 18 March 2010.
The goal of FATCA is to enable
the IRS to identify US persons
(generally US citizens or residents)
seeking to evade US taxation by
holding assets in foreign (i.e. non-
US) accounts, whether in their own
name or via non-US structures such
as trusts or funds. FATCA requires
information about US persons and
their foreign accounts to be reported
directly or indirectly to the IRS.
Non-compliance with FATCA
may lead to a US withholding tax
of 30% on US source income,
including the gross sales proceeds
of certain U.S. assets.
What is UK FATCA?
UK FATCA (also known as “son
of FATCA”) is the name popularly
(but not officially) given to a
regime, which the UK government
promoted from 2012 onwards in
response to FATCA. In essence, the
goal of UK FATCA is the equivalent
of FATCA but in respect of UK
residents rather than UK persons,
i.e. it is to enable HMRC to identify
UK residents seeking to evade UK
taxation by holding assets in foreign
(i.e. non-UK) accounts, whether
in their own name or via foreign
structures such as trusts or funds.
How is FATCA Implemented in the
Cayman Islands?
The Cayman Islands entered into
a Model 1 inter-governmental
agreement (US IGA) with the US.
Under Model 1 IGAs, financial
institutions gather the relevant
information and report this to
their home country (usually its tax
authority). The home country then
forwards on the information to the