Head of Business development at TMF Group Cayman Islands Clive Gibbons takes a look at the islands’ compliance record...
With all the media attention surrounding the US “Foreign Account Tax Compliance Act” (FATCA) and the G5 pilot scheme in the UK, I thought it only right that we touch on these issues in this month’s newsletter. So what is all the hype about and what does it mean for Cayman and people who use the Jurisdiction? Well firstly I’ll briefly describe what the jargon means. Cayman officially signed the FATCA Model 1 agreement earlier this year. This in fact means that Cayman service providers do not and will not have any direct reporting links or communication with the IRS, which seems to be a common misconception by many. What it does mean is that It’s the responsibility of the Cayman service provider to inform the Cayman Islands regulatory body (CIMA) on US beneficial owners whom hold an interest in Cayman based structures/accounts. However it is widely known that for many years US citizens must declare all their worldwide assets to the IRS, so in relation to our clients, I feel the upheaval will indeed be minimal. In terms of the G5 pilot scheme, this was indeed born off the back of FATCA and as recently publicized by the Cayman government, Cayman has underlined their commitment to this pilot scheme. However the intricacies of how this will be enforced and what the reporting requirements are, are still yet to be determined, but I envisage this to be along the similar lines as the FATCA Model 1.
It is my opinion that that the commitment shown to these reporting requirements is again a testament to the Cayman Islands continued progression and development in maintaining their position as a global leader within the offshore sector. You see the global landscape in taxation is changing and the modern cooperative and transparent jurisdictions will be the ones that flourish now and in the future. Eventually all leading reputable jurisdictions will use automatic exchange of information mechanisms and unified approaches in terms of tax matters. Cayman attracts some of the most successful global Hedge Fund Managers in the world and why do they come here? They come here because of the credibility, the expertise, the heritage that Cayman offers, and now they will come for the transparency, why for transparency? Because with transparency comes the element of stability and nobody likes surprises when it comes to their wealth, Investments or their day job. Put yourself in the shoes of a successful Hedge Fund Manager with millions of dollars under administration, would you want any surprises?……I didn’t think so either.
The one thing clients need to be aware of in times such as these, what with regulatory changes and mandatory reporting requirements becoming increasingly more stringent the world over, is that their service provider is keeping abreast of these changes and ensuring they are constantly aware of their client’s statutory reporting responsibilities. It pleases me too say the TMF Group is indeed one such service provider.
If you would like to learn more about TMF Group Cayman Ltd and how we can assist to ensure you’re meeting all your Cayman Corporate Governance, statutory reporting requirements, Trust and Corporate services, please do not hesitate to contact me