The Cayman Islands government certainly believes this will be the case.
In announcing the conclusion of negotiations for a Model 1 inter-governmental agreement (IGA) to implement the US Foreign Account-Holder Tax Compliance Act (FATCA), the islands’ Minister for Financial Services Wayne Panton declared that the government was “especially pleased that the conclusion of an IGA will provide certainty to Cayman’s significant fund industry with respect to FATCA. implementation.”
Minister Panton did not, however, elaborate on the nature of the ‘clarity’ that would be afforded to the industry; and he did not express the belief that this ‘certainty’ would extend to US users of Cayman funds.
No mention was made either of the government’s certainty that the US would reciprocate under the Model 1 IGA given widely circulated reports that the US has neither the legislative framework nor political inclination to provide information on Cayman Island residents using US financial institutions as the Model 1 IGA provides.
Of course the initialing of the IGA by both sides is not the end of the matter since this just demonstrates an intention to sign the agreements and an intention to honour the terms of the agreement which will be publicly available only when officially signed.
Still that ‘uncertainty’ aside, the Cayman government is certain of these other things:
- the Model 1 IGA for foreign financial institutions in the Cayman Islands will streamline the reporting of information regarding accounts and non-financial entities substantially owned by United States citizens and residents;
- the initialing of the IGA recognizes that the global community is moving in the direction of the automatic exchange of information standard for tax purposes; and
- the initialling and subsequent signing of the IGA will again demonstrate Cayman’s commitment to engage in globally accepted tax and transparency initiatives.
This professed confidence by the Cayman Islands government perhaps explains, in part, its decision to engage in further discussions with the UK’s HM Treasury to finalize the terms of a UK Model 1 IGA FATCA agreement.
Only time will tell.