The offshore accounts maintained in the Cayman Islands have been extensively covered in the media. The allure of offshore accounts is coming to end. On March 20, 2013 the Cayman Islands have announced that it would adopt FATCA. American expats who have never heard about FATCA should read What is FATCA. The Cayman Islands Government will proceed with an intergovernmental agreement Model I IGA of the U.S. Foreign Account Tax Compliance Act.
What is the key feature of this FATCA agreement?
The Cayman Islands government had extensive FATCA discussions with its financial industry and the USA. The Model I IGA of Foreign Account Tax Compliance Act ensures that the financial institutions would be required to report the information to its government. Consequently, the governments of the USA and the Cayman Islands would exchange information.
This FATCA agreement has a profound impact and provides the stability of the Cayman Islands financial sector. Moreover, it is an evidence of the Cayman Islands transparency.
What is the feedback from the government officials of the Cayman Islands about FATCA?
Cayman Finance CEO Gonzalo Jalles mentioned that “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.”
Minister Anglin, Minister for Financial Services, noted “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 mentioned 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 of FATCA 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’.
American expatriates should be prepared for upcoming FATCA changes. Many U.S. citizens and green card holders believe that if they do not owe any tax, then there are no penalties. The truth is that the IRS introduces new tax forms (for example, FATCA) on a regular basis. A failure to file the FBAR, FATCA and other overseas tax forms can result in a penalty from $10,000 up to criminal prosecution. American expatriates are encouraged to discuss individual tax situations with an expat tax CPA that provides international tax services. International tax experts at Artio Partners are here to help you.