Introduction

The Cayman Islands Tax Information Authority (TIA) recently issued further updates on the compliance obligations of Cayman financial institutions under legislation implementing the:

  • Common Reporting Standard (CRS);
  • US Foreign Account Tax Compliance Act;
  • UK Crown Dependencies and Overseas Territories International Tax Compliance Regulations (UK CDOT); and
  • EU Savings Directive.

The vast majority of Cayman investment funds will be classified as reporting financial institutions under the Cayman Islands automatic exchange of information (AEOI) legislation and so have notification, reporting and other ongoing obligations (for further information please see "Amended CRS regulations adopted").

This update sets out key dates and developments that have changed since then.

Key dates for 2017

  • Early May 2017 – new AEOI portal user guide available for the CRS, US Foreign Account Tax Compliance Act and UK CDOT.
  • Week beginning May 10 2017 – the CRS and US Foreign Account Tax Compliance Act notification and registration function available on the AEOI portal.
  • Week beginning June 12 2017 – CRS and US Foreign Account Tax Compliance Act reporting function available on the AEOI portal.
  • June 30 2017 – CRS and US Foreign Account Tax Compliance Act notification and registration deadline for Cayman financial institutions.
  • July 30 2017 – CRS and US Foreign Account Tax Compliance Act reporting deadline for Cayman reporting financial institutions, for the 2016 reporting year.
  • July 31 2017 – deadline for correcting any errors for US Foreign Account Tax Compliance Act reports for 2014 and/or 2015.
  • December 31 2017 – the review of pre-existing lower value individual accounts and pre-existing entity accounts for CRS purposes must be completed.

A timely reminder for CRS compliance

Updated guidance notes

The TIA has issued an updated version of the CRS Guidance Notes, which provide a timely reminder of the differences between the CRS and the US Foreign Account Tax Compliance Act, and some much-needed clarification on matters that the local financial services industry have been discussing with the TIA over the past 12 months.

TIA registration

All financial institutions (both reporting and non-reporting) must register with the TIA on the AEOI portal and provide the required information, which includes details of the new role of change notifier.

The 2017 reportable jurisdictions

The 2017 CRS reportable jurisdictions were recently published and updated by the government to include Jersey – these are set out as an appendix to the guidance notes.

Also included is a provisional list of 2018 reportable jurisdictions so that reporting financial institutions can start planning for 2018 reporting.

Liquidation reporting obligations

The guidance notes confirm that Cayman financial institutions which are in liquidation or being wound up in 2017 must fulfil their CRS notification and reporting obligations as normal. Any reporting financial institutions that are being liquidated in 2017 will have reporting obligations in respect of the 2016 calendar year for the 2017 reportable jurisdictions, and for that part of 2017 until their final dissolution or winding up, in respect of both the 2017 and 2018 reportable jurisdictions. Under the CRS (unlike the US Foreign Account Tax Compliance Act) a Cayman investment entity, like an investment fund, remains classified as such even if it is closed (ie, has no remaining participating investors or is not open to further investors) or in liquidation. Further, the TIA has confirmed that it will not expect any reporting financial institution which has been dissolved while the AEOI portal has been offline to fulfil its CRS registration or reporting obligations.

Updated self-certification forms

Individual and entity self-certification forms are being updated and will be available soon on the TIA legislation webpage.

Written policies and procedures

Every reporting financial institution must have written policies and procedures in respect of their obligations under the CRS. Investment funds which have delegated this role to their administrator or another third-party service provider must still have written policies and procedures in place, which describe the functions delegated, the oversight of the delegation and performance of any CRS obligations that have not been delegated. For reporting financial institutions which have not delegated these obligations, more comprehensive written policies and procedures must describe the performance of those obligations in a way that is reasonable for their business.

Separate report

When the AEOI portal is reopened, separate extensible mark-up language files must be submitted for each reportable jurisdiction for which a reporting financial institution has reportable accounts. If it has no reportable accounts, the new AEOI portal is expected to allow a nil return check box to be selected.

Change notifier

Each financial institution must appoint an individual as its change notifier. The same person cannot be appointed as both change notifier and principal point of contact. The change notifier will be the only person from whom the TIA will take instructions that the principal point of contact has changed. Any changes to the principal point of contact or change notifier must be reported to the TIA within 10 business days.

Phasing out of UK CDOT and EU Savings Directive obligations

The TIA has confirmed that financial institutions which have reporting obligations under UK CDOT should not file a separate report under UK CDOT in 2017, but instead include the following details in their single CRS file for the United Kingdom as a reportable jurisdiction under the CRS:

  • all information that would be reportable under UK CDOT; and
  • if it has reporting obligations under the CRS, any information that is reportable under the CRS for the United Kingdom as a reportable jurisdiction which is not already reported above.

From 2018, all reporting on UK persons will be under the CRS obligations, as UK CDOT is phased out. The Defence Technical Information Centre has also confirmed that from 2017 reporting is not required under EU Savings Directive legislation, as the information will be covered by reporting under the CRS.

For further information on this topic please contact Jonathan Culshaw at Harneys' Hong Kong office by telephone (+852 3195 7200) or email (jonathan.culshaw@harneys.com). The Harneys website can be accessed at www.harneys.com. Alternatively, contact Sean Scott at Harneys' London office by telephone (+44 20 7842 6080) or email (sean.scott@harneys.com).

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