Tax & Accounting Blog

Cayman Islands will Adopt an Intergovernmental Agreement for FATCA Implementation

1042-S, 1099, International Reporting & Compliance, ONESOURCE, ONESOURCE Nonresident Alien Taxation, Tax Information Reporting, Trust Tax, W-8 & W-9 Foreign Reporting April 10, 2013

The Cayman Islands Government has announced that it will adopt an intergovernmental agreement (IGA) with the United States for implementation of the U.S. Foreign Account Tax Compliance Act, commonly known as FATCA. The Caymans-U.S. IGA will follow the “Model 1” for FATCA cooperation which was drafted by the U.S. Department of the Treasury, giving the Caymans agreement certain features in common with IGAs already arranged with the United Kingdom and Germany. Under a Model 1 IGA, financial institutions in the foreign country will report information on their U.S. customers to their own national tax authority which will exchange information with the IRS. The Caymans government also announced a similar arrangement for the automatic exchange of certain information with the United Kingdom, and that final negotiations on the mechanisms for exchange with the U.S. and the UK are expected to be concluded quickly. The United States has already signed FATCA IGAs with the United Kingdom, Spain, Denmark, Mexico, Ireland and Switzerland. Japan has signed a statement endorsing a framework for intergovernmental cooperation to facilitate FATCA implementation, and France and Italy were signatories to the 2012 endorsement of domestic collection of FATCA information and bilateral exchange of information between tax authorities of the U.S. and foreign countries.

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