Above: UK and Cayman Islands officials (Photo: Ministry of Financial Services)

By the Caribbean Journal staff

The Cayman Islands and the United Kingdom signed what the former called a “FATCA-type” agreement on Tuesday.

The agreement paves the way for Cayman to “automatically share financial information with the UK on UK taxpayers who hold Cayman Islands accounts,” the Ministry of Financial Services, Commerce & Environment said.

FATCA is a United States law that deals with tax reporting for Americans living abroad. (Cayman also expects to sign a similar agreement with the US in the near future, it said.)

Steps are already underway to set up the framework for implementation of the UK agreement, according to Cayman Premier Alden McLaughlin.

“Entering into this agreement with the UK builds on our shared history of cooperation in tax and transparency matters,” McLaughlin said. “Furthermore, it strongly indicates our mutual support for a single, global standard for automatic exchange of information.”

McLaughlin said that while the “pace of dialogue” had considerably quickened in recent months, he said the acceptance of automatic exchange of information was the result of “decades of global discussion regarding tax transparency.”

“This approach will also minimize operational costs for governments and business,” he said.

Under the agreement, financial institutions in Cayman will report information on accounts that are “substantially owned by persons with UK tax-reporting obligations to the Cayman government.”

The government will subsequently forward that information to the UK, according to Wayne Panton, Cayman’s Minister of Financial Services.

The agreement also contains details of an alternative reporting regime for UK resident non-domiciled individuals, Panton said.

In a statement, UK Chancellor of the Exchequer, George Osborne, welcomed the agreement.

“The UK has led the way in creating a new global standard for tax transparency and automatic tax information sharing,” he said. “This demonstrates our shared commitment to tackling tax evasion.”

Cayman Finance, an association which promotes the territory’s financial services industry, said the deal “reinforces our reputation as a well-regulated and transparent IFC.”

“We look forward to learning more about the details of this agreement, its implementation and its reporting implications.”