Law company register established in Cayman

August 8th, 2019

All law firms and sole practitioners operating in the Cayman Islands must register with a new legal regulator before the end of this month, as government presses on with the job of meeting the latest international rules for the financial sector. The newly-registered Cayman Attorneys Regulatory Authority (CARA) has begun to build its regulatory oversight framework that includes the register aimed at helping fight money laundering.

In accordance with the Legal Associations Law, which came into effect in February, the Cayman Islands Legal Practitioners Association (CILPA) had formed CARA to supervise the functions and build the regulatory oversight framework. The framework includes law firms registration. CILPA has 546 members, which is approximately 80% of the lawyers working in Cayman.

Registering all lawyers is just one of many developments in the offshore sector because the Cayman Islands has to address the concerns raised by the most recent Caribbean Financial Action Task Force (CFATF) review until February 2020. The CFATF review identified risks and threats to numerous areas of the financial sector and related business such as real estate and precious metal brokers.

A newly-appointed national coordinator for the Anti-Money Laundering Steering Group (AMLSG), Elisabeth Lees, has spent the last few months working, along with the Anti-Money Laundering Unit, to coordinate action in the public sector in order to implement the recommendations in the CFATF report.

If Cayman fails to address problems defined in the review, the FATF could impose a remediation plan to its detriment.

As a result, a new working group has been created in order to fight proliferation financing, an area of focus in the CFATF report.

OECD seeks Feedback on Dispute Resolution In Cayman

July 28th, 2019

The OECD has requested stakeholders’ input on the dispute resolution processes in place in the Cayman Islands as well as in other 9 jurisdictions – Andorra, Anguilla, Bahamas, Bermuda, the British Virgin Islands, the Faroe Islands, Macau (China), Morocco, and Tunisia.

The OECD is reviewing these jurisdictions’ implementation of the base erosion and profit shifting (BEPS) Action Plan minimum standard on tax treaty dispute resolution under Action 14. In partaking in the BEPS Inclusive Framework, the territories have committed to implementing this and the three other BEPS minimum standards and take part in peer review processes.

The OECD is seeking input from taxpayers, via a questionnaire, on specific issues relating to access to Mutual Agreement Procedure (MAP) resolution; the clarity and availability of MAP guidance; and whether MAP agreements are timely implemented in the Cayman Islands and other 9 jurisdictions.

As taxpayers are the main users of the MAP, their input is key for the review process.

CIMA signs MoU with American insurers group

August 14th, 2018

The Cayman Islands Monetary Authority (CIMA) signed a memorandum of understanding (MoU) with the National Association of Insurance Commissioners (NAIC) with a view to help insurance supervisors in the US and Cayman Islands coordinate on regulatory issues with the goal of efficient, fair, safe and stable insurance markets. According to a press release from CIMA, signed on August 4, the agreement encourages a formal framework to provide mutual assistance and exchange of information to coordinate compliance in each jurisdiction.

CIMA Managing Director Cindy Scotland said that the memorandum of understanding was a significant milestone in the CIMA’s ongoing collaboration with the regulators of the world’s largest insurance market. She noted: “I am confident that this agreement will strengthen the relationship between the NAIC and the Authority. It will also provide stronger capabilities for each organisation to achieve our common goals of economic stability and consumer protection”.

CIMA said it has established good working relationships with various state regulators within the US and other regulatory, standard setting bodies outside of the Cayman Islands.

To date, CIMA has entered into 55 bilateral agreements and 6 multilateral agreements with regulatory authorities, including the International Association of Insurance Supervisors and US Banking regulators (Federal Reserve System Board of Governors, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision).

CIMA’s regulatory powers extended

August 9th, 2018

The Cayman Islands Monetary Authority (CIMA) has said that a Privy Council decision made in July 2018 has confirmed the regulator’s powers to compel non-licensee Cayman-registered companies“>Cayman-registered companies to give up information on behalf of other overseas regulators under the authority’s 2018 Law.

According to a press release issued by CIMA, the Judicial Committee of the London-based court refused Select Vantage Inc.’s application to appeal a decision of the Cayman Islands Court of Appeal, which had found in CIMA’s favour last year.

“In refusing Select Vantage Inc.’s application, at the very first stage, the Privy Council has effectively and clearly affirmed the Court of Appeal’s earlier ground-breaking decision regarding CIMA’s powers. This decision acknowledges that CIMA has powers to obtain information from a non-licensee Cayman Islands registered company on behalf of another overseas regulator under the Monetary Authority Law 2018,” the Authority said.

Select Vantage Inc. is a Cayman Islands registered exempt company operating as a proprietary trading firm, which currently is not a licensee of CIMA. It was under investigation by the Australian Securities and Investments Commission (ASIC) for potential market manipulation and the Cayman Authority sought information for that regulator.

In 2017, CIMA was asked by Australian officials for information about the company for its investigations and CIMA obtained a Grand Court order obliging Select Vantage to hand over details of its traders. The firm challenged the order, arguing among other things that it was just a subsidiary and did not have the details requested. But the Cayman Islands Court of Appeal found in CIMA’s favour and rejected Select Vantage’s claims.

CIMA Managing Director Cindy Scotland noted the importance of the Privy Council’s decision and the affirmation of the authorities powers “to require information and documents in response to a proper request from an overseas regulatory authority whether the company or companies involved are licensed by CIMA or not”.

Cayman Government promises no new taxes

June 8th, 2018

Cayman Finance Minister Roy McTaggart told a recent Chamber of Commerce economic forum that no “coercive revenue measures” will be introduced during the Cayman Government’s term in office, which ends in 2021.

The Minister said that the undertaking was intended to give the private sector comfort, certainty and confidence.

McTaggart also noted that the government of the Cayman Islands is committed to reducing taxes in areas that will promote economic growth, as well as to reducing the cost of doing business and the cost of living for residents.

Cayman launches CbC Reporting Portal

May 17th, 2018

The Cayman Islands’ country-by-country (CbC) reporting portal has been launched, with the first CbC reports due from some taxpayers by the end of the month.

CbC reporting requires multinational enterprises (MNEs) that meet certain criteria to file a country-by-country report with tax authorities. CbC reporting applies only to MNE groups with annual consolidated group revenue of not less than a specified threshold amount in the preceding fiscal year, which is USD 850 million in Cayman.

CbC reports are due within 12 months of the end of the fiscal year. As a result of an earlier extension, the first deadline will be May 31, 2018 in order to provide extra time for those taxpayers whose fiscal year began in the first 5 months of the year in 2016.

According to the Finance Ministry of the Cayman Islands, a Reporting Entity resident in the jurisdiction must make a CbC Report via the CbCR Portal even if that results in duplication because a CbC Report for the same MNE Group has already been made to another Competent Authority, for instance where the MNE Group appoints a Surrogate Parent Entity in another participating jurisdiction or where a Reporting Entity resident in the islands is also resident for tax purposes in another participating jurisdiction.

It should be noted that the CbC Report provides a breakdown of the amount of revenue, profits, taxes, and other indicators of economic activities for each tax jurisdiction in which the MNE group does business.

UK to force Cayman to make beneficial ownership of companies public

May 2nd, 2018

The Cayman Islands and other British Overseas Territories lost the political battle in House of Commons vote on May 1.

The vote to amend Britain’s Sanctions and Anti-Money Laundering Bill to force British Overseas Territories – which are not UK Crown Dependencies – to make registers of company owners public, may fundamentally change both Cayman’s financial services business model and its relationship with the UK.

The amendment to the bill, which now goes to the House of Lords for a largely procedural vote, will require all 14 remaining British territories to make beneficial ownership of companies registered in their respective jurisdictions public. The Cayman Islands has such a registry now, but it can only be inspected by certain personnel for the purposes of specific law enforcement or tax compliance requests.

UK and Cayman sources both speculated as to the reasons for why such a decision was made and the conciliatory version of the amendment was not accepted for debate. Many noted that a crucial Brexit bill concerning the operations of the single market once the U.K. leaves the European Union next year was up for debate in the Commons as well.

From Cayman supporters’ perspectives, it was the worst possible outcome.

Cayman London office director Eric Bush told the UK public radio: “We’re exploring all options. The decisions and actions taken [Tuesday] were taken in haste, were taken with misinformation, rhetoric and Hollywood jargon. The Cayman Islands government is not going to do that.”He also added that the actions taken are certainly a blow to the relationship, which shows a lack of trust, it shows a disrespect and disregard for the constitution.

Cayman issues Guidance on Compliance with CbC Reporting, FATCA, CRS

April 10th, 2018

New guidance on the obligation on large multinational groups to file a country-by-country report in the jurisdiction and also an update on Common Reporting Standard and US Foreign Account Tax Compliance Act reporting have been released by the Cayman Islands.

On March 29, guidance was released by the Cayman Islands’ Department for International Tax Cooperation (DITC) alongside the release of:

– The CbCR Notification Template (in CSV format);
– The Authorisation Letter Template; and
– The CbC XML Schema User Guide (Draft).

The guidance provides an overview of the OECD’s recommendations and of the Cayman law underpinning the CbC reporting regime (the Tax Information Authority Law (2017 Revision)), explains the obligation to notify which entity will file the CbC report, sets out the filing deadlines, how to complete the CbC report, and how the Cayman Islands intends to share the information required multilaterally.

The Cayman Islands recently pushed forward the deadline for filing CbC reports. The deadline was March 31, 2018, for those groups with fiscal years beginning in 2016 between January 1 to March 31, 2016. It was then required within 12 months of the end of any fiscal year, for those fiscal years beginning after March 31, 2016. The Ministry of Financial Services and Home Affairs has now announced the following: “A Reporting Entity resident in the islands must make its first CbC Report by May 31, 2018, if the CbCR Regulations require it to make its first CbC Report on or before May 31, 2018.” This provides additional flexibility specifically for those whose fiscal period begins in the first five months of the year.

In a separate announcement, the DITC announced that it has reopened the automatic exchange of information (AEOI) portal for notification and reporting in relation to the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).

The deadlines are:

– April 30, 2018 for notification (i.e. enrollment);
– May 31, 2018, for reporting for the 2017 calendar year.

Cayman eases deadline for CbC Reporting

February 16th, 2018

Authorities in the Cayman Islands have pushed back the deadline for notifying local authorities of which entity will file a country-by-country (CbC) report, and for filing the first reports.

On February 2, 2018, the extensions were announced as well as a confirmation was made that in early March 2018 CbC reporting guidance will be released and the Cayman CbC reporting portal will be launched.

Under the notification obligation, the reporting entity of an MNE Group with constituent entities resident in the Cayman Islands must appoint the individuals as the “Primary Contact” and the “Secondary Contact” for those constituent entities. The Primary Contact may be an agent of the reporting entity while the Secondary Contact must be a fiduciary or management-level employee of the Reporting Entity. Neither the Primary Contact, nor the Secondary Contact must be resident in Cayman.

The CbC Report must be made via the CbCR Portal by uploading an XML file in the format prescribed by the OECD.

The CbC report is one element of a new 3-tiered standardized approach to transfer pricing documentation proposed under BEPS Action 13. Under the framework, MNEs are required to provide aggregate information annually for each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. The reporting covers information on entities doing business in a particular jurisdiction as well as the business activities each entity engages in.

Budget of Cayman targets Budget Surpluses

November 4th, 2017

The Cayman Islands’ Premier, Alden McLaughlin, recently delivered the Cayman Islands’ first 2-year budget, which was notable for the absence of new borrowing or revenue-raising measures.

According to McLaughlin, his administration will continue to pay down debt and deliver operational budget surpluses to fund capital investment plans and provide for contingency against future economic shocks. He noted that taking the path of “fiscal responsibility” is crucial to giving businesses the confidence to invest in the jurisdiction.

Measures introduced previously to support economic growth will be maintained, including reduced import duties, lower business licensing fees, development concessions, and other measures to support small business. Also, the Government has committed to slashing at least 25% of regulations hindering small business.

McLaughlin reported on his recent visit to Brussels ahead of the EU’s planned year-end announcement to name jurisdictions it considers are not complying with global tax good governance standards. He said he explained about the reasons for the territory’s tax regime focusing on indirect taxes instead of direct taxes and outlined how the territory complies with OECD regulations, which he said places it in the same league as Germany, Canada, and the UK.

McLaughlin explained that the Cayman Islands has no double tax treaties allowing for the shifting of tax liabilities, and that businesses operating in the territory understand their obligation to pay taxes due in their home jurisdictions.