Tax Information Authority (International Tax Compliance) (United States of America) Regulations (2021 Revision)

Summary

This is the consolidated 2021 Revision of the Cayman Islands regulations that implement the Cayman Islands–United States FATCA Intergovernmental Agreement (IGA) domestically. The Regulations set out the definitions (Financial Institution, Reporting Financial Institution, Non-Reporting Financial Institution, NFFE, Reportable Account, Specified Person, etc.) and the operative rules that Cayman-based Financial Institutions must follow to identify, document and report US reportable accounts to the Cayman Tax Information Authority (the Competent Authority), which in turn exchanges the information with the US Internal Revenue Service.

The Regulations apply to any person carrying on business in the Cayman Islands as a custodial institution, depository institution, investment entity or specified insurance company (i.e. a "Financial Institution" under the Regulations), distinguishing between Reporting Financial Institutions and Non-Reporting/Registered Deemed-Compliant Financial Institutions. They cover the following areas:

• Registration: Registration with the US IRS.
• Due diligence: Due diligence and identification of account holders, including modified due diligence for certain account types.
• Reporting: Annual reporting obligations.
• Non-participating institutions: Special rules for non-participating financial institutions.
• Anti-avoidance: Anti-avoidance provisions.
• Notification: Notification duties to the Competent Authority.
• Compliance powers: Inspection and compliance powers.
• Offences: Offences for non-compliance, including director/officer liability.
• Third-party agents: The ability to appoint third-party agents.
• Guidance: The Competent Authority's power to issue guidance.

This 2021 Revision consolidates the original 2014 Regulations with subsequent 2015, 2018 and 2020 amendments and is presented as the current in-force text as at 31 December 2020; it does not itself introduce new substantive changes beyond consolidating prior amendments.

Key obligations

• Every Reporting Financial Institution and every Registered Deemed-Compliant Financial Institution must comply with the applicable IRS registration requirements for FATCA purposes, in the manner (including electronic means) that the IRS may require.
• A Reporting Financial Institution or Registered Deemed-Compliant Financial Institution must apply for registration as soon as possible, and in any event prior to 31st December 2014, or, if it had not yet commenced business by that date, not later than 30 days following commencement of business.
• Reporting Financial Institutions must carry out identification (due diligence) procedures to determine which accounts are Reportable Accounts, applying the exclusions and elections set out for pre-existing individual accounts, new individual accounts, and pre-existing entity accounts.
• Reporting Financial Institutions must report on Reportable Accounts to the Competent Authority in accordance with the Reporting Obligation provisions.
• Reporting Financial Institutions must apply identification and disclosure obligations, and separate reporting obligations, in respect of accounts held by or payments made to Non-participating Financial Institutions.
• Reporting Financial Institutions must notify the Competent Authority as required under the notification provisions.
• Reporting Financial Institutions must implement arrangements to obtain the taxpayer identifying number (TIN) of every US specified person who is an account holder of a Reportable Account, effective from 1 January 2017 for pre-existing accounts and from 1 July 2014 for new accounts opened on or after that date.
• A Financial Institution that appoints a third-party agent to carry out its FATCA duties must at all times retain access to, and be able to produce to the Competent Authority, the records and documentary evidence used to identify and report on reportable accounts, and remains responsible for any failure of that agent to perform its obligations.
• Financial Institutions and their directors/officers may be liable to offences for failure to comply with the Regulations, as set out in the offences provisions.

Applies to

Reporting Financial Institutions, Non-Reporting Financial Institutions, Registered Deemed-Compliant Financial Institutions, custodial institutions, depository institutions, investment entities, specified insurance companies, Financial Institutions carrying on business in the Cayman Islands

Deadlines

• prior to 31st December, 2014: Deadline for a Reporting Financial Institution or Registered Deemed-Compliant Financial Institution to apply for IRS registration under the Agreement.
• not later than 30 days following the date of commencement of business: Alternative registration deadline where the institution had not commenced carrying on business by 31st December 2014.
• from 1st July, 2014: Obligation to obtain taxpayer identifying numbers takes effect for new accounts opened on or after this date.
• from 1st January, 2017: Obligation to obtain taxpayer identifying numbers takes effect for pre-existing accounts.

Related documents

• This document is made under Tax Information Authority Act (2021 Revision)