CF_Mag_2015_web-V2

36 Cayman. Moving finance forward.
All Cayman
Islands financial
institutions will be
reporting financial
institutions unless
they fall within a
narrow range of
exemptions, which
will be relevant in
very few cases.
legislation and guidance notes
under the categories of investment
entities, custodial institutions,
depositary institutions and specified
insurance companies. A Cayman
Islands financial institution is any
financial institution organised
under the laws of or resident in the
Cayman Islands.
All Cayman Islands financial
institutions will be reporting
financial institutions unless they
fall within a narrow range of
exemptions, which will be relevant
in very few cases. Therefore, for
instance, the vast majority of hedge
and private equity funds will be
reporting financial institutions.
Pursuant to the Cayman Islands
implementing legislation, all
Cayman Islands reporting financial
institutions have to register on
the IRS website and obtain a
global intermediary identification
number (GIIN).
Cayman Islands reporting financial
institutions had until 30 April 2015
to notify the DTIC of:
• their name
• their FATCA classification
• GIIN
• Principal Point of Contact
The deadline for submission of
FATCA reports by Cayman Islands
financial institutions is 31 May
annually.
The reporting format is consistent
with currently published Schemas by
the IRS for US FATCA and by the
OECD for the Common Reporting
Standard (see further below),
and is in XML format. Cayman
Islands financial institutions have
the option of submitting reports to
the DTIC individually, by entering
information manually on the
website, or via bulk submission by
uploading an XML file(s). Cayman
Islands financial institutions that
have registered as a sponsoring
entity have the ability to upload an
XML file containing information for
multiple financial institutions.
However, according to DTIC
releases, and contrary to domestic
legislation in force at the time of
writing, it is not necessary to file
a nil return. Given their customer
base, many Cayman financial
institutions may not have anything
to report. The DTIC has however
noted that the Portal will accept nil
returns. Furthermore, the Office of
the Chief Counsel at the IRS has
stated that submitting a nil return
is “best practice” and that the IRS
intends to use non-filing for three
consecutive years as an indicator of
possible non-compliance. Once a
financial institution is registered on
the Portal (and has carried out all its
requisite due diligence), filing a nil
return is straightforward. Therefore
we expect that many financial
institutions will choose to file a nil
return as a matter of course.
The Extension of FATCA to
Other Countries
The OECD, working with the G20
is working on proposals to develop
a global standard for the automatic
exchange of information on tax,
to be known as the “Common
Reporting Standard”. In January
2014 the OECD published a report
containing its proposals including
a template form of IGA, which
is substantially influenced by the
FATCA approach. On 29 October
2014, 51 jurisdictions (including
the Cayman Islands), signed
an agreement to automatically
exchange information based on
Article 6 of the Convention on
Mutual Administrative Assistance
in Tax Matters. This agreement
specifies the details of what
information will be exchanged and
when, as set out in the Common
Reporting Standard. Many other
countries have agreed to become
signatories. Therefore, it is
reasonable to expect that, in the
near future, automatic exchange of
information on tax will be rolled
out to other EU member states and
G20 countries and other nations
after that.
About the Author
Tim Dawson, Senior Associate,
leads Mourant Ozannes’
regulatory practice in the
Cayman Islands. His work
includes acting on mergers,
acquisitions and disposals of
regulated and unregulated
entities, joint ventures, advising
on regulated activities, stock
exchange listings and the
establishment and servicing of
investment funds. Tim is fluent
in Portuguese and Spanish and
has lived and worked in Brazil.