The Cayman Islands issued The Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2016. These regulations amend the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations, 2015.
Non-Reporting Financial Institutions (FIs) are now required to register with the Cayman Islands TIA by April 30, 2017 (or by April 30 of the year after the entity becomes an FI).
Change in Approach
Previously, a Non-Reporting FI was not required to comply with the notification requirements in the Cayman Islands CRS regulations. The Cayman Islands regulations relating to FATCA, UK FATCA/CDOT and CRS required only that Reporting FIs provide “Notification” to the Cayman TIA by registering in the Cayman Islands AEOI portal. The point of Notification had been to notify the Competent Authority of the fact that the FI had reporting obligations.
What Is A Non-Reporting FI?
The term “Non-Reporting Financial Institution” includes a broad range of FIs:
a Governmental Entity, International Organisation or Central Bank, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution;
a Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; a Pension Fund of a Governmental Entity, International Organisation or Central Bank; or a Qualified Credit Card Issuer;
any other Entity that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the Entities described in subparagraphs B(1)(a) and (b), and is defined in domestic law as a Non-Reporting Financial Institution, provided that the status of such Entity as a Non-Reporting Financial Institution does not frustrate the purposes of the Common Reporting Standard;
an Exempt Collective Investment Vehicle; or
a trust to the extent that the trustee of the trust is a Reporting Financial Institution and reports all information required to be reported pursuant to Section I with respect to all Reportable Accounts of the trust.
Any Exemptions to the Expanded Portal Registration Rule?
The amended regulations make clear that each Cayman FI, other than an exempted body must give the Cayman TIA an information notice. An “exempted body” is a narrow category of FI:
the Cayman Islands Monetary Authority under section 5(1) of the Monetary Authority Law (2016 Revision) (“CIMA”);
a Governmental Entity; or
a Pension Fund of CIMA or a Governmental Entity
Do You Need a GIIN for Your Non-Reporting Financial Institution?
Under FATCA, a Reporting FI is required to obtain a Global Intermediary Identification Number (GIIN). The Cayman TIA requires the Reporting FI to enter its GIIN in the AEOI portal as part of the notification process.
For UK FATCA/CDOT , the Reporting Cayman Islands FI was not required to obtain a GIIN. If the FI had a GIIN it could enter it into the AEOI portal. If it did not have a GIIN, it would use a reference number generated by the Cayman TIA during the online notification process.
The existing Cayman CRS Guidance Notes does not require a Reporting FI to obtain a GIIN. It is not expected that the Cayman TIA will change its process to require that Non-Reporting FIs obtain a GIIN.
It is expected that the Cayman TIA will issue updated CRS Guidance Notes and AEOI Portal User Guide in the first quarter of 2017. Given the expected high volume of activity in the Cayman portal in 2017, it will be important to register Non-Reporting FIs as soon as possible after the Cayman TIA releases its updated CRS Guidance Notes and Portal User Guide
The deadline for Cayman Islands CRS and FATCA reporting is May 31, 2017.
For further guidance on your Cayman Islands FATCA and CRS obligations, contact me at firstname.lastname@example.org