The Cayman Islands Tax Information Authority has embraced FATCA reporting with a precise focus. They have made a strong point to remind all Cayman Islands investment funds that have been designated as foreign financial institutions about their international tax compliance obligations. The designation of foreign financial institution is given whenever a bank or investment fund has foreign nationals as part of the investment group.
Once considered the greatest tax haven of all, the Cayman Islands have fully come on board with FATCA reporting and obeying the international tax compliance measures of the IRS and the United States Treasury Department. This is a clear sign of the changing waters, and the international tax team at LSL CPAs recommends that anyone with foreign financial accounts should pay attention.
Launch of the Cayman FACTA Reporting Portal
At the end of March, Cayman Islands Department for International Tax Cooperation opened the Cayman Automatic Exchange of Information Portal. Rather than relying on foreign financial institutions in the Cayman Islands to comply with the reporting requirements on their own, the taxing authorities want them to do it on a much more official basis. The foreign financial institutions can access the portal from a direct link on the Cayman Islands government website. In other words, the government is involved, wanting to make sure the international image of the Cayman Islands is revised.
The Cayman Islands Department for International Tax Cooperation extended the deadline of their FATCA reporting obligations by a month to April 30, 2015. However, the foreign financial institutions still need to provide electronic notification of their compliance procedures. With such notifications comprised of the full name, address, designation and contact details of the individual identified and authorized as the principal point of contact for each foreign financial institution, is it surprising that compliance is being embraced.
The FATCA Responsible Officer
Such individuals are now known as the FATCA Responsible Officer on the Cayman Islands Portal and must register with the government. In truth, the Cayman Islands has swung from one extreme to the other, going from utter financial privacy as a true tax haven to financial cooperation with the IRS and FATCA. A secondary consequence is a reluctance of Cayman Island banks and investment funds to work with United States citizens.
If you have foreign financial accounts in the Cayman Islands or anywhere else in the world, the time is now to report those accounts. You need to make sure you file FinCEN Form 114 by June 15th, 2015. The international tax team at LSL CPAs wants to help. Given that the deadline for FBAR reporting with the IRS is approaching rapidly, please contact us before it’s too late.
FACTA Reporting & LSL CPAs
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate about the Cayman Islands, FATCA or FBAR filing requirements. To learn more about how these issues might apply to your international financial accounts or tax situation, please call LSL CPAs international tax accountant Yana Weaver at 714.569.1000.
