The ministry of financial services has announced that Cayman will implement the OECD common reporting standard later this year. The CRS standardizes the global automatic exchange of information for tax purposes.
Automatic exchange of information will ultimately lead to the transmission of large amounts of data, such as the investment income of individual taxpayers, from one tax authority where an account is located to the tax authority where the taxpayer is resident.
It enables resident tax authorities to validate whether taxpayers have correctly reported their income.
Although the main focus is on exchanging information about financial accounts, other types of income such as pensions or real estate transactions could become relevant.
Financial Services Minister Wayne Panton said implementation of the common reporting standard will further strengthen Cayman’s already-recognized participation in international efforts to improve tax compliance.
“The CRS is an important progression in ensuring international tax compliance, across country borders,” he said. “By implementing it via the enactment of local regulations, Cayman continues to show our full participation and strength, as a member of the growing network of countries worldwide that engage in international tax cooperation.”
More than 90 jurisdictions around the world have committed to the implementation of the common reporting standard to agreed timetables.
Cayman is one of more than 50 jurisdictions committed to undertaking the first automatic exchanges of tax information under the CRS by 2017.
In March of this year, Cayman launched a portal for the automatic exchange of information, which will be an important operational component of the CRS.
The online system currently allows notification and reporting by financial institutions in relation to U.S. FATCA.
FATCA is also a automatic information exchange method, but the common reporting standard is much broader in scope and international.
The existing system will be modified and adapted to facilitate the automatic tax info exchange with all participating jurisdictions under the CRS.
The Department of International Tax Cooperation will implement the CRS in Cayman, in accordance with Cayman’s international treaty network, and a 2014 amendment to the Tax Information Authority Law that enabled all forms of exchange of information for tax purposes, including automatic exchanges.