The Cayman Islands will soon join more than 50 other jurisdictions in adopting the Common Reporting Standard (CRS) of the Organization for Economic Cooperation and Development (OECD).
The CRS is a system by which members may exchange financial information automatically, allowing for greater efficiency and stronger tax compliance. Much like the Foreign Account Tax Compliance Act, this new global standard will require financial institutions to provide tax authorities with greater access to data, in an effort to assist with compliance.
The Cayman Islands Department for International Tax Compliance has begun the process of alerting local financial institutions of the impending changes. New regulations that will accompany the adoption of the CRS are in the process of being created. By the terms of this agreement, the Cayman Islands are part of a group of early adopters implementing the new standard. These early adopters will begin exchanging information under the CRS as early as September 2017. An additional 11 nations have agreed to begin exchanging tax information by 2018.
All financial institutions with operations in the Cayman Islands should begin preparing for the new regulations and obligations that will accompany the adoption of the CRS. Official guidance notes to assist firms with questions regarding the CRS are expected to follow.
While the CRS will create additional responsibility for financial institutions, observers believe it will play a significant role in strengthening international tax compliance efforts, while increasing vital cooperation among member states.
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