The Cayman Islands and the UK have 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 the government also intends to issue guidance to assist with the implementation, according to Cayman’s Premier, Alden McLaughlin (pictured).
“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 says.
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 says. “This approach also will minimise operational costs for governments and business.”
Cayman’s minister of financial services Wayne Panton says 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. The IGA contains details of the alternative reporting regime for UK resident non-domiciled individuals.
UK Chancellor of the Exchequer George Osborne says: “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. This demonstrates our shared commitment to tackling tax evasion.”
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.