Cayman Islands Concludes FATCA IGA and New Tax Information Exchange Agreement with the United States

The Cayman Islands government announced on August 13 that it had concluded negotiations with the United States on a Model 1 intergovernmental agreement ("IGA") and on a new tax information exchange agreement ("TIEA"). Both governments initialed the agreements, which they indicated will be officially signed as soon as possible. The texts of the IGA and the TIEA will be released only after the agreements are signed.

The Model 1 IGA provides that Cayman Islands financial institutions will report information, with respect to financial accounts and entities substantially owned directly or indirectly by United States citizens and residents, directly to the Cayman Islands government, which will automatically forward such information to the U.S. IRS. Once the IGA is formally signed, Cayman Islands financial institutions may rely on the IGA even if it is not yet in force and will not be required to enter into a Foreign Financial Institution Agreement with the IRS. Cayman Islands financial institutions generally will still be required to register with the IRS and obtain a global intermediary identification number ("GIIN"), but they will have at least some additional time to obtain such GIIN.

The IGA will be reviewed by the United Kingdom and will serve as a basis for a similar agreement between the United Kingdom and the Cayman Islands.

See: Cayman Islands News Release.See also: Treasury Revises Model IGAs under FATCA (July 15, 2013); Cayman Islands to Adopt Model I FATCA IGA (March 18, 2013).