Cayman Islands Working Group Releases Draft Guidance Notes under FATCA
The Cayman Islands Working Group released a draft of Guidance Notes on the FATCA intergovernmental Agreements ("IGA") between the Cayman Islands and the United States, and the Cayman Islands and the United Kingdom. The 200-page document was issued in draft form to obtain feedback from both Cayman financial institutions and other parties with interest in the Cayman Islands, as well as from the UK's HM Revenue and Customs and the U.S. Department of Treasury. The Working Group expects to finalize the Guidance Notes by the end of June.
The Cayman Islands and the UK signed an IGA on November 5, 2013. On November 29, 2013, an IGA was signed by the Cayman Islands and the U.S. Draft legislation implementing the IGAs was published on April 20, 2014. Draft regulations are expected to be released shortly.
The purpose of the Guidance Notes, according to the draft, is to provide practical assistance to businesses, their advisers, and the Cayman tax authorities, with a guiding principle to avoid unnecessary administrative and cost burdens and to ensure the efficient operation of reporting requirements. The draft Guidance Notes address both the U.S. and UK IGAs in the same document, although some sections are limited to one or the other IGA. For example, the draft contains a separate Appendix covering Alternative Reporting Regimes under the IGA with the UK.
Reporting Cayman Islands Financial Institutions must register with the IRS and obtain a Global Intermediary Identification Number ("GIIN") by December 22, 2014 to be on the IRS List of compliant FFIs on January 1, 2015. Cayman Islands financial institutions may register and receive their GIIN earlier, should they wish to do so. Moreover, according to the draft, a Reporting Cayman Islands Financial Institution must register with the IRS by July 1, 2014 (i) if it maintains one or more branches (other than a Limited Branch or U.S. branch) in jurisdiction(s) that are not covered by a Model 1 IGA, (2) if it is renewing its Qualified Intermediary Agreement, or (iii) if it intends to be a Lead FI for one or more Member Financial Institutions that are not established in, and operating exclusively in, other Model 1 IGA jurisdictions. First reporting to the Cayman Tax Information Authority under the U.S. IGA will be on May 31, 2015 for the 2014 reporting year.
See: Draft Guidance Notes between Cayman, U.S. and UK.Related news: FATCA IGAs Signed with Cayman Islands and Costa Rica (December 2, 2013). See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.