The Cayman Islands Department of International Tax Cooperation (DITC) issued an updated Industry Advisory (the Advisory) on March 17, 2020 extending the deadline for Cayman financial institutions (FIs) filing 2019 Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) reports to Sept. 18, 2020. The Advisory also announced Cayman’s launch of a new DITC portal to replace its existing Automatic Exchange of Information (AEOI) portal for registering FIs and for filing FATCA and CRS reports. The Advisory follows Cayman’s issuance of amended FATCA and CRS burden reduction regulations in February 2020.1 The new system, amended guidance and revised reporting deadlines will likely present both challenges and relief for FIs in the current economic environment as they brace for global uncertainties as discussed in more detail below.
New DITC system
According to the Advisory, Cayman’s AEOI portal, which is currently offline, will be replaced with a new DITC portal scheduled to launch in June of 2020. The new portal is expected to feature bulk user changes, bulk reporting and more streamlined processes that were not available in the old system.
The Advisory includes a list of Frequently Asked Questions with new Guidance Notes and an Institutional User Guide, but FIs will still need to build in sufficient lead-time to understand changes, modify systems, and develop procedures for implementing these changes. Additionally, although Cayman has indicated that all data and user accounts from the old AEOI portal will be migrated to the new DITC portal, FIs should allocate budget and design controls for confirming that data was properly migrated from the old portal to the new system. FIs will also need a plan for escalating, remediating and following up on potential data quality issues that could impact their ability to file accurate and complete returns going forward. Cayman has indicated that it will send emails to FIs in June with additional information on how to login to the new portal. We await further guidance on these issues.
Other important developments
Besides announcing the new system and extended filing deadlines, the Advisory lists several other important developments intended to reduce administrative burdens for Cayman FIs. First, and perhaps most importantly, the annual deadline for filing Cayman Islands FATCA and CRS reports has been changed from May 31 to July 31 annually starting with 2020 reports. Secondly, under Cayman’s new guidance notes, the requirement that an FIs’ designated Principal Point of Contact (PPOC) or Authorized Person (AP) be an individual has been eliminated. Instead, FIs can now choose either an individual or an entity as its PPOC or AP. This development is key for ensuring that FIs do not miss critical messages from DITC when individuals leave companies or change roles and may also help companies streamline procedures and centralize management of reporting obligations to a single entity in the structure that can be designated as PPOC or AP for the group. Finally, Cayman has revised its list of CRS reportable jurisdictions to include Albania, Ecuador, Kazakhstan, Maldives, Nigeria, Oman and Peru. FIs may need to modify their systems and procedures to account for these changes.
The changes to Cayman’s systems, requirements and reporting deadlines are good news for most Cayman FIs who have historically struggled to compile information needed to prepare reports timely. However, many will be challenged to operationalize these changes while managing other global uncertainties. FIs should therefore continue to monitor developments in Cayman and should work with their tax, compliance and information technology teams now to understand any required changes.
For more information on RSM’s comprehensive FATCA and CRS reporting services, please refer to our FATCA website.
1See Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2020 and Tax Information Authority (International Tax Compliance) (United States of America) (Amendment) Regulations, 2020