The Cayman Islands government has recently approved legislation to amend the Cayman Tax Information Authority for International Tax Compliance and Common Reporting Standard (CRS) Regulations.
The purpose of updating the legislation is to ensure an effective implementation of CRS.
Frew explained that there are certain differences in the entity classification rules under the CRS Regulations and the US Foreign Account Tax Compliance Act (FATCA).
The new legislation means every Cayman financial institution, whether a Cayman reporting financial institution or a non-reporting financial institution, has to notify the tax information authority of their status by 30 April 2017.
She noted that the new regulation differs from FATCA, where a notification was not required for Cayman reporting financial institutions that had no reportable accounts, or for non-reporting financial institutions.
For financial institutions in Cayman that have already notified the tax information authority of their status for FATCA purposes, they must also update their notifications to confirm whether they are a Cayman reporting financial institution or a non-reporting financial institution, all existing information is correct, and provide any new information required.
Each Cayman reporting financial institution is required to report in full by 31 May 2017 in respect to any reportable accounts and to file a nil return in respect of reportable jurisdiction for which it has no reportable accounts.
With the new CRS legislation in Cayman financial institutions, nil returns are now mandatory to report.
Each Cayman reporting financial institution must establish, implement and comply with written policies and procedures to comply with the CRS Regulation.
The policies and procedures include how the Cayman reporting financial institution will address its obligations regarding due diligence, recordkeeping, notification of the required information and reporting to the tax information authority, the appointment of any third parties, and cooperation with the tax information authority’s compliance measures.