This week, the Cayman Islands became the first British Overseas Territory to formally sign an automatic tax information sharing agreement, similar to the USA’s FATCA (Foreign Account Tax Compliance Act).
The UK tax office (HMRC) writes, “UK taxpayers with accounts in the Cayman Islands will now be automatically provided to HM Revenue & Customs. This will help HMRC to ensure that the correct amount of tax is being paid by those with money in Cayman Islands accounts and increase HMRC’s ability to clamp down on tax evasion.”
The Cayman Islands follow in the footsteps of the Isle of Man, Jersey and Guernsey, which all signed agreements in October.
The islands have also agreed to be part of the G5 multi-lateral information sharing pilot; an agreement between the UK, France, Germany, Italy and Spain. What that means in lay-terms is those five countries, including the Cayman Islands, will automatically exchange information about bank accounts held by taxpayers in those five jurisdictions.
The G5 multi-lateral information sharing pilot is similar to FATCA in that it will help to identify and deter residents from evading local tax and promote enhanced cross border financial information reporting.
Chancellor of the Exchequer, George Osborne, commented:
“Alongside the significant investment that the government has made in HMRC’s anti-avoidance and evasion work, these agreements will help them to clamp down further on those individuals who seek to hide their assets offshore.”
Further reading:
HMRC’s ‘Reducing tax evasion and avoidance’.