The Cayman Islands Tax Information Authority (the “Cayman TIA”) has launched an online portal (the “Portal”) to facilitate FATCA reporting by Cayman Islands entities pursuant to the Intergovernmental Agreement between the United States and the Cayman Islands (the “IGA”).
Cayman Islands Reporting financial institutions (“RFIs”), which may include investment funds, must register with the Cayman TIA via the Portal by April 30, 2015 and must file annual FATCA reports through the Portal by May 31, 2015 (for accounts reportable with respect to 2014). A more detailed discussion of the technical aspects of the process follows.
Overview: The Portal serves two functions, namely, to facilitate registration with the Cayman TIA and filing of annual FATCA returns with the Cayman Islands TIA. It is contemplated that a Cayman Islands RFI would (1) access the Portal website, (2) submit FATCA-related information about the RFI through the website (and thereby create an account on the Portal), (3) access the account home page (referred to as “Cayman Islands AEOI Portal”), and (4) upload and submit FATCA annual returns to the Cayman TIA through the home page. There are no fees associated with registration or reporting.
Registration: The Portal enables a Cayman Islands RFI to register with the Cayman TIA for FATCA purposes and thereby “notify” the Cayman TIA regarding its FATCA status and the fact that it has registered with the U.S. Internal Revenue Service (the “IRS”) and obtained a global intermediary identification number (“GIIN”). The registration application is one page and requires basic information about the financial institution such as its financial institution type (e.g., Investment Entity), its GIIN, its email address, and the identity of its “Principal Point of Contact.”
Principal Point of Contact: The term Principal Point of Contact has not been defined. However, based on the User Guide v1.1 to the Portal, the term presumably would include any person (including third-party service providers) who has the authority, on behalf of the Cayman Islands RFI, to (1) access the Portal, (2) complete the registration process, (3) submit FATCA returns through the Portal, and (4) appoint Secondary Users of the Portal as described below. Also, while not entirely clear, it would seem that a Principal Point of Contact has the authority to deal with the Cayman TIA concerning the financial institution’s general FATCA compliance-related matters. The User Guide v1.1 to the Portal does not state or suggest that a Principal Point of Contact must be resident in or otherwise have connections to the Cayman Islands.
As part of the registration process, a Cayman Islands RFI must upload a signed pdf copy of a letter bearing its letterhead, which identifies and authorizes the person to serve as a Principal Point of Contact. Although it is not entirely clear, it does not appear that a Principal Point of Contact would be subject to any FATCA-related liabilities solely by virtue of his or her status as such, absent intentional acts (e.g., false statements, dishonesty, or fraud) on his or her part in dealing with the Cayman TIA. In this regard, the concept appears to resemble that of a “responsible officer” for purposes of the FATCA registration with the IRS.
A Principal Point of Contact may appoint one or more Secondary Users who will be generally granted with all of the same access rights with respect to the Portal as the Principal Point of Contact. While not entirely clear, presumably any authorized third-party (e.g., the financial institution’s auditor and administrator) may serve as a Secondary User. The Principal Point of Contact will be responsible to the RFI for administration and monitoring of such Secondary Users (e.g., safeguard of password).
Reporting: It is expected that a Cayman Islands RFI will receive an access code and temporary password shortly after the Cayman TIA’s approval of the registration application. A Cayman Islands RFI would use the access code (usually its email) and the password to log on to the Cayman Islands AEOI Portal to file any annual U.S. FATCA returns with the Cayman TIA. The financial institution will be given the choice to either upload an XML file containing the requisite FATCA information or manually upload such information to the Portal.
Although the Portal currently covers only U.S. FATCA and U.K. FATCA (UK FATCA registration and returns are not due until 2016), it is expected that the Portal will be expanded in the future to allow users to file reports under the forthcoming Common Reporting Standard of the Organisation for Economic Co-operation and Development.
Nil Returns: Cayman Islands financial institutions that do not have any reportable accounts (e.g., a U.S. taxable investor who invests in an offshore feeder) are not required to file annual U.S. FATCA returns (i.e., “Nil returns”) with the Cayman TIA, however, they can still elect to do so. The IRS, through its online FATCA Q&A, has also pronounced that Nil returns will not be required for participating foreign financial institutions, including Reporting Model 2 FFIs (e.g., reporting Bermuda financial institutions).
If you would like to discuss the contents of this article or FATCA issues generally, please contact Jon Brose at (212) 574-1615, Ron Cima at (212) 574-1471, Jim Cofer at (212) 574-1688, Daniel Murphy at (212) 574-1210 or Peter Pront at (212) 574-1221.
You may also want to consider contacting your Cayman Islands counsel regarding implications of the issues discussed herein from the Cayman Islands legal perspective.
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If you have any questions regarding the matters covered in this memo, please contact any of the partners and counsel listed below or your primary attorney in Seward & Kissel’s Investment Management Group.
