TAX AVOIDANCE
Synopsis: The UK has signed agreement for automatic exchange of information with the Cayman Islands.
Date posted: Tuesday, November 12, 2013
Following our earlier bulletin we reported that the Cayman Islands had indicated that it would accept automatic reporting to the UK on a similar basis to the Isle of Man, Jersey and Guernsey.
It was intended that tax reporting would be broadly in line with the Foreign Account Tax Compliance Act (FATCA). The Act requires foreign banks and other financial institutions to report their US clients to the US Internal Revenue Service in so that they cannot avoid being taxed on foreign income.
The Cayman agreement is slightly different as only Cayman financial institutions are affected. This means 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.
COMMENT:
The Cayman Islands is the first British Oversea Territory to sign a similar agreement with the UK, so it will be interesting to see if any others follow.