Cayman Islands to implement OECD common reporting standard on automatic exchange of information

The Organization for Economic Co-operation and Development (OECD) common reporting standard (CRS) is a standard that provides for the automatic exchange of financial account information between participating governments. The requirements under this standard are in addition to any Foreign Account Tax Compliance Act (FATCA) requirements. The Cayman Islands has recently enacted regulations to implement the CRS into domestic law, effective January 1, 2016. The CRS may be of interest to fund managers that manage a Cayman Islands investment fund, which is generally a “Reporting Financial Institution” under the standard (as is an investment manager/adviser itself).

The CRS Regulations will require Cayman Islands Reporting Financial Institutions to report information on the holders of “Reportable Accounts” which are resident in “Reportable Jurisdictions” to the Cayman Islands Department of International Tax Co-Operation. Once reported, that information will be sent to the tax jurisdiction of the account holders.

As a result of the implementation of the CRS, Reporting Financial Institutions should consider whether they are currently collecting the information required to identify a subscriber’s tax residency and report it, and that the Reporting Financial Institution has registered as required with the DITC on its online portal.