04/21/2021 | News release | Distributed by Public on 04/21/2021 00:54
In April 2020, the Cayman Tax Authority (DITC) announced a new 'CRS Compliance Form.' The expansion of requirements under the Cayman automated the exchange of information regime affecting all managers with funds domiciled in Cayman. With this new requirement comes various impacts and changes to Cayman CRS Compliance.
CRS, when initially implemented, was made up of two primary components:
While CRS compliance is typically complex, there is particular importance surrounding the common reporting standard in the Cayman Islands, with the majority of fund managers having funds domiciled in the Cayman Islands. When SS&C performs our annual filing process with our clients, more than 90% of the XMLs generated are submitted back to Cayman. This means the Cayman Islands are receiving the bulk of the volume and need to make sure they are properly analyzing this information. Based on the volume of filings Cayman receives, they are considered an important jurisdiction for CRS compliance, and the new CRS compliance form requirements are asking for aggregate information for those non-reportable accounts and the reason why they are non-reportable.
Changes for 2021
The new CRS compliance form requirement was announced in April 2020 with accompanying notes by the Cayman's Department for International Tax Cooperation (DITC). It is now being used as the vehicle by which they are able to request additional information to ensure compliance with CRS. What is notable about this timing is that the Cayman Islands are a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which makes them subject to peer review of the AEOI standard. The fundamental elements of this review are the evaluation of the data collection process, analysis and assessment, and compliance functions. This peer review appears to be focused on the effectiveness of the CRS implementation. By collecting this new scope of information, the Cayman Islands are trying to showcase their competency in implementing the CRS because they are due to be rated in 2021. Since the Cayman Islands have no tax system when compared with other jurisdictions, the Cayman Islands have limited information and data about Financial Institutions, service providers and investors. Data collection, analysis and assessment will be an integral part of the evaluation by the Global Forum's AEOI Peer Reviews that are currently conducted. The AEOI Peer Reviews will result in a rating of CRS implementation effectiveness in the participating jurisdictions. The implementation of the new CRS Compliance Form should ensure that these factors are addressed so that the Cayman Islands can demonstrate the effective implementation of CRS. Additionally, the CRS Compliance Form will be used as a risk management tool to assign risk profiles to Financial Institutions based on the additional information obtained, which will also allow a targeted audit selection.
The reporting period of this new requirement has now been pushed to a later date. The CRS compliance form filing is now due on 9/15/2021 for the 2019 and 2020 tax year.
SS&C is committed to assisting the financial industry with the new Cayman CRS Compliance and is providing full preparation services concerning the CRS Compliance form, which includes determining which sections apply and collecting responses for those sections. SS&C offers a robust and comprehensive tax and investor compliance solution, to help you reduce your operational burden by using our industry tested technology to manage your data.
To learn more about the new requirements, impacts and changes download our webinar What you need to know: Planning for Cayman CRS Compliance or listen to our recent podcast or view our video on Cayman CRS Compliance.