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Global Forum: Cayman’s tax transparency regime is ‘on track’

Updated: Apr 9

A peer review of the Cayman Islands’ system for the automatic exchange of financial account information has found that the required legal framework is in place and reporting financial institutions are complying in a timely and effective way.

Cayman is one of 65 out of 99 reviewed countries whose automatic exchange of information (AEOI) regimes have been deemed ‘on track’.

The analysis of Cayman showed that last year 19,097 financial institutions reported 450,071 Cayman accounts.

Cayman’s Department of International Tax Cooperation (DITC) exchanged information with 73 international partners in 2021, up from 70 in 2020 and 64 in 2019.

Five exchange partners highlighted issues with the information they received, such as missing dates of birth and addresses or invalid tax identification numbers, but steps were taken to remedy those situations.

One exchange partner reported rejecting more than 25% of the files received, due to a technical problem that was subsequently addressed.

Two thirds of countries compliant

The Global Forum released the results of its peer review report on Wednesday, during the first day of its annual plenary meeting in Seville, Spain, which is bringing together ministers, other high-level authorities and delegates from more than 100 member jurisdictions.

The Global Forum reported that not only are jurisdictions automatically exchanging information on 111 million accounts, covering total assets of EUR11 trillion, but are ensuring that financial institutions effectively comply with the requirements.

In addition, the Global Forum said its 165 members continue to effectively implement exchanges on request and reported significant impacts of its wide-scale capacity-building activities.

The peer reviews showed that virtually all surveyed jurisdictions have put in place the necessary legal frameworks and successfully started exchanging information without significant timing or technical issues.

Two-thirds of the jurisdictions are actively conducting compliance activities to ensure financial institutions are reporting accurate information. These jurisdictions, including Cayman, were given ‘on track’ ratings.

Another 15 jurisdictions were rated ‘partially compliant’ as they were found to have put in place credible compliance frameworks but needed further implementation.

And 19 jurisdictions were rated ‘non-compliant’, because they had fundamental deficiencies in their frameworks.

Meeting focuses on tax fairness

The three-day meeting of the Global Forum is focusing on how it can move to the next stage of delivering its tax transparency agenda, promoting the fairness of tax systems and strengthening domestic revenue mobilisation.

“The Global Forum continues to shape the tax transparency landscape,” said OECD Secretary-General Mathias Cormann. “Widening access to financial account information for tax administrations helps ensure everyone pays their fair share of tax, boosting revenue mobilisation for countries worldwide, and particularly for developing countries.”.

So far transparency initiatives identified more than EUR114 billion in additional tax revenues through voluntary disclosure programmes, offshore tax investigations and related measures since 2009, the Global Forum reported.

The Global Forum also published 10 new peer review reports today on the Exchange of Information on Request (EOIR) for Barbados, the British Virgin Islands, Iceland, Israel, Kuwait, the Maldives, Morocco, Slovenia, South Africa and Türkiye. Seven jurisdictions, including Barbados, were given a ‘largely compliant’ rating, while the BVI was rated as ‘partially compliant’.

IMS is one of the longest established company management firms in the Cayman Islands. IMS is licensed by the Cayman Islands Monetary Authority to provide independent directors, company management and incorporation, mutual fund administration, captive insurance and trust services. For more information about our services, please contact us.

Disclaimer: this publication does not constitute legal or professional advice and should not be relied on as such.

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