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 government also intends to issue guidance to assist with the implementation.
“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,” said Cayman’s Premier, the Hon. Alden McLaughlin.
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,” McLaughlin said. “This approach also will minimise operational costs for governments and business.”
Wayne Panton, Cayman’s Minister of Financial Services, said that 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. Minister Panton also noted that the IGA contains details of the alternative reporting regime for UK resident non-domiciled individuals.
“This is a momentous step forward in tax transparency, and a tribute to a close working relationship between the UK and the Cayman Islands,” said Mark Simmonds, Minister for Overseas Territories. “When we work together we can push the international agenda forward. I want to express my thanks for all the hard work put in by all concerned.”
UK Chancellor of the Exchequer, George Osborne, also welcomed the signing. “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,” he said.