FATCA / AEOI Update. Current Status and Action Points for Cayman Entities. April 2016

Transcription

1 FATCA / AEOI Update Current Status and Action Points for Cayman Entities April 2016

2 Current Status of FATCA and CRS in Cayman Current Position - FATCA Model 1 Intergovernmental Agreements ( IGA s) were signed with the US and the UK in Second report for US IGA (for 2015) and first report for UK IGA is due 31 May 2016 (for 2014 and 2015). Version 2.1 of the FATCA Guidance Notes on the implementation/application of the Cayman IGAs were issued on 1 July Current Position - CRS Cayman Islands signed the Multilateral Competent Authority Agreement in October On October 20, 2015, the Cayman Islands enacted CRS into law with an effective date of January 1, The Cayman Islands are one of 56 committed early adopters of CRS. All Crown Dependencies and Overseas Territories are early adopters. Early adopters have to report in 2017 for the 2016 year. Limited guidance is expected from the Cayman Islands Tax Information Authority. Draft guidance notes were released in March 2016 and final guidance notes are expected to be released shortly. Primary reference should be made to the OECD CRS Commentaries. On April 8, 2016, the Cayman Islands TIA extended the timing for submitting notifications for UK FATCA (and US FATCA for entities established in 2015) to June 10, 2016, and for filing 2014 and 2015 UK FATCA and 2015 US FATCA returns until July 8, Previously the deadlines were April 30, 2016 and May 31, 2016, respectively. 2

3 The biggest challenge for Cayman funds - US investors Cayman released the list of participating jurisdictions on Dec 8, 2015 (an updated list is expected to be released shortly). This was needed for due diligence. 95 countries in total listed. The US is not a participating jurisdiction and there is considerable doubt as to when they will join. Most in industry expect this will not be for at least several years if ever. Any investor in a non participating jurisdiction is a challenge if they are a Passive NFFE or a Financial Institution. Biggest issue for Cayman funds is going to be US investors including documenting the US feeder fund invested into a Cayman master fund. Even if they have already been documented for US FATCA purposes investors in Cayman funds will need to be documented for CRS. Notably a controlling person is expected to be required on that form. In particular CRS has a concept of senior managing official which may apply to a lot of US feeder funds. Challenge will be getting forms signed and documentation complete. If there are no natural person(s) who exercise control of the Entity then the Controlling Person will be the natural person(s) who hold the position of senior managing official of the Entity Form documentation Which form(s) to request for a new investor and which forms for pre-existing investors is going to be a significant nuisance. Cayman issued a combined CRS/FATCA form on December 8, 2015 Need to have documented policies and procedures to ensure all parties involved in FATCA/CRS documentation are positioned to execute the requirements correctly. 3

4 FATCA / CRS Timeline Legend FATCA CRS FATCA and CRS January 1, 2016 New account due diligence / identification onboarding procedures are required in order to comply with CRS April 30, 2017 Deadline to provide Cayman Competent Authority with: Name CRS classification Name, address, designation and contact detail of the principal point of contact. If there is any change to the information above, the Cayman Competent Authority needs to be notified immediately June 10, 2016 U.K. FATCA deadline for Cayman Islands FIs to notify the Cayman Islands TIA. U.S. FATCA notification deadline for Cayman Islands FIs established in June 30, 2016 Deadline for FFIs to complete remediation on preexisting accounts other than high-value individual account May 31, 2017 Deadline for submission for 2016 year FATCA report to Cayman Islands TIA for US reportable persons. Deadline for submission of 2016 year CRS report to Cayman Islands TIA. July 8, 2016 Deadline for submission for 2015 year FATCA report to Cayman Islands TIA for US reportable persons. Deadline for submission of 2014 and 2015 year FATCA report of UK reportable persons to Cayman Islands TIA. December 31, 2016 Deadline for FFIs to complete remediation on preexisting high-value individual accounts for CRS Deadline for sponsoring entities to register their sponsored entities on the IRS Portal and if required obtain GIINs for the sponsored entities. December 31, 2017 Deadline for FFIs to complete remediation on preexisting accounts other than high-value individual accounts for CRS. 4

5 Steps for Cayman Entities to prepare for CRS 1. Entity Classification Each Cayman entity will need to determine if they are a Financial Institution ( FI ) or a Non-Financial Foreign Entity ( NFFE ) under CRS. Generally, if an FI under FATCA, the entity will also be an FI under CRS. If an entity was a Passive NFFE or met an exempted category under FATCA, they need to review their classification under CRS to determine their status (e.g. certain Cayman investment managers/advisors). Notably, there is no sponsored entity option under CRS. 2. Registration Register with Cayman Authorities If an entity which was previously a Passive NFFE or exempt under FATCA and is determined to be an FI under CRS, they will need to register by April 30, 2017 with the Cayman Islands Tax Information Authority ( TIA ). Additionally, the CRS regulations imply that separate registration is needed for CRS 3. Complete US withholding tax / CRS self-certification forms A CRS form and the format is unclear currently is expected to be requested by counterparties, prime brokers, etc. 4. Due Diligence Ensure all New Account onboarding documents have been updated (due by 1 January 2016) for CRS by reviewing Subscription documents and PPM documents. Notably, any new account holder beginning January 1, 2016 needs to include a self certification of their CRS status for the account to be opened. This is noted on Page 16 of the Cayman CRS regs - With respect to New Individual Accounts, upon account opening, the Reporting Financial Institution must obtain a self-certification. Consistent with other countries Cayman is widely expected to allow 90 days for the self certification form to be validated. Remediate existing investors (account holders as of 31 December 2015) by various dates depending on type of investor and account balance - First remediation deadline is 31 December

6 Steps for Cayman Entities to prepare for CRS (cont d) 5. Reporting File a CRS report by 31 May 2017 for reportable investors/account owners as of 31 December Document Retention Review policies for retaining documentation for 6 years of each investor s CRS status (i.e. evidence that the entity has reviewed them for indicia) to ensure compliance with Cayman Regulations. 6

7 How we can assist KPMG Cayman Islands AEOI team provides insight and in-depth knowledge in the implementation of FATCA and CRS. We will ensure our clients have a clear understanding of the requirements and timelines. KPMG s services include: Written summary of FATCA and CRS obligations and requirements Entity classification analysis and assistance with GIIN registration (if required). Review or completion of US withholding tax forms (i.e. Forms W-9/W-8BEN-E/W-8IMY) and Self-Certification forms Review of PPM/Subscriptions documents to determine if FATCA or CRS compliant FATCA or CRS onboarding and remediation Assurance reviews of internal or administrator assessment of investors/account holders into the various categories FATCA or CRS reporting to Cayman TIA in XML format. 7

8 Contact information David Conen Partner, Tax KPMG Cayman Islands Gautam Ganeshan Senior Manager KPMG Cayman Islands The following information is not intended to be written advice concerning one or more Federal tax matters subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. 8

9 Thank you kpmg.ky The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. a 2016 KPMG, Swiss a entity. Cayman All Islands rights reserved. partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), 9