Cayman Opts for Model 1 IGA for FATCA

After considerable consultation with its financial services industry, and substantive discussions with US officials, the Cayman Islands Government today announced that it would adopt a Model 1 intergovernmental agreement (IGA) in response to the US Foreign Account Tax Compliance Act (FATCA).

Minister for Financial Services, the Hon. Rolston Anglin, made the announcement from the floor of the Legislative Assembly. He also said the decision will apply to a similar arrangement for the automatic exchange of certain information with the UK, and that he expects final negotiations on the mechanisms for exchange with the US and the UK to conclude quickly.

He acknowledged that the Model 1 IGA, which is an agreement between governments for the exchange of information, ensures that business in Cayman will continue to operate and compete effectively with that of its global counterparts. It also underscores the Islands’ positive reputation regarding transparency and exchange of information for tax purposes.

‘The global landscape in taxation is changing at an unprecedented pace’, said Minister Anglin, who also is the Deputy Premier of the Cayman Islands. 

‘The modern cooperative and transparent jurisdiction will be one that uses automatic exchange of information mechanisms and multilateral approaches in tax matters, and that demonstrates effectiveness in the implementation of these measures’.

Following his statement in the Legislative Assembly, Minister Anglin again thanked those who provided assistance and input into Government’s decision.

‘I thank civil servants in the Ministry for Financial Services, who continue to work hard on this initiative; and our jurisdiction’s industry associations, for their comprehensive feedback and positive engagement’, he said. 

‘I also thank Cayman Finance, which represents industry as a whole, for providing a consolidated position and analysis of the different alternatives’.

Cayman Finance CEO Gonzalo Jalles said the organisation is committed to working with Government on the implementation of FATCA, and that the decision-making process was a good example of how Cayman’s public and private sectors effectively work together.

‘I encourage industry to devote the necessary resources and remain very involved in the implementation of FATCA’, Mr Jalles said.  ‘While the Model 1 IGA has extended deadlines in some areas, this still will be a very significant undertaking that demands substantive action from all industry participants in the coming months’.

In his address to the Legislative Assembly, Minister Anglin noted that the Cayman Islands already has 30 tax information exchange arrangements in place with all major trading partners. Further agreements are either technically agreed and awaiting signature, or are in the course of negotiation.

He also pointed out that Cayman has been greatly involved in the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and since 2009 has served as an active member of the Steering Group and the Peer Review Group.

‘This decision to adopt the Model 1 IGA will fortify our good standing in the global community and continue to build on the solid foundation we already have in place with our existing agreements’, Minister Anglin said.