Above: the US Treasury Department in Washington

By the Caribbean Journal staff

The Cayman Islands and the United States have signed an agreement that will pave the way for the automatic exchange of tax information under the US’ FATCA law.

Cayman has signed a so-called Model 1 Intergovernmental Agreement, meaning financial institutions in Cayman can directly report information to the Caymanian government on accounts and non-financial entities that are “substantially owned” by US citizens and residents.

The Caymanian government will then relay that information to the United States’ Internal Revenue service.

The two sides also signed a new tax information exchange agreement, replacing the original pact signed in 2001.

“By working together to detect, deter, and discourage offshore tax abuses through increased transparency and enhanced reporting, we can help build a stronger, more stable, and accountable global financial system,” said Julie Nutter, the US Embassy in London’s Minister-Counselor for Economic Affairs.

“We look forward to collaborating with the Government of the Cayman Islands to further these objectives.”
Minister Wayne Panton, who signed the agreement on behalf of the Cayman Islands, said the agreement would “implement the standardized data-reporting framework for FATCA.”

“This should help defray administrative costs for financial institutions,” he said.
The agreement follows a similar pact signed by the Cayman Islands and the United Kingdom earlier this month.