On 16 June 2015, the Department of International Tax Cooperation of the Cayman Islands (the “DITC”) announced that it would be implementing the CRS into domestic law. The draft Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations, 2015 are currently under review and it is expected that these regulations will, once in final form, be passed into local legislation in October 2015.
The Cayman Islands became a signatory to The Multilateral Convention of Mutual Administrative Assistance in Tax Matters on 29 October 2014 (the “Convention”) which permits participating countries to enter into agreements that provide for the automatic exchange of information (“AEOI”) with respect to certain tax matters. Through the operation of the Convention, the Cayman Islands, along with over 60 other countries, have signed a Multilateral Competent Authority Agreement (“MCCA”) providing the legal basis through which countries can agree to the CRS. In order to implement the CRS domestically, each country will need to introduce domestic legislation, which, as noted above, is expected to be passed in Cayman Islands law in October 2015.
The Cayman Islands is one of the first countries to agree to implement the AEOI under the CRS by September 2017 (referred to as the “Early Adopter Group”). It is noted that the United States is, although an OECD member, currently not part of the Early Adopter Group and will instead continue to rely on FATCA and related agreements in the exchange of information in relation to tax matters.
The CRS represents a significant step towards the AEOI for tax purposes and there are, as at 23 July 2015, more than 90 countries (for the list of countries see link here) that have committed to its implementation.
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