The Cayman Islands signed an agreement for the automatic exchange of information among tax authorities in Berlin, Germany, on Wednesday.
The Multilateral Competent Authority Agreement, which was concluded by 51 countries, activates the automatic exchange of information based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Early adopters who signed the agreement have pledged to work toward launching their first information exchanges by September 2017. Others are expected to follow in 2018.
The agreement was developed by the Organization for Economic Cooperation and Development, in cooperation with G20 countries.
Minister of Financial Services Wayne Panton, who signed on behalf of the government said, “For Cayman to sign the [Multilateral Competent Authority Agreement] is a logical progression in our long-standing international cooperation efforts, and we are pleased that so many countries and jurisdictions are now part of this worldwide effort to fight tax evasion via a global standard, across borders.”
While Cayman is one of the 51 early adopters that have committed to begin exchanging information in 2017, Cayman’s history of cooperation dates back to 2005 with participation in the European Union Savings Directive.
“In April 2013, based on our understanding of the direction of global efforts, we informed the U.K. that we would join what was known then as the G5 pilot – an initiative announced by the U.K., France, Germany, Italy and Spain, regarding the multilateral automatic exchange of tax information,” Mr. Panton added.
More than 90 countries now have committed to implementing the new global standard of automatic AEOI.
Minister Panton said the U.S. has also indicated that it will undertake automatic exchange of tax information pursuant to FATCA from 2015, and that it has entered into intergovernmental agreements with jurisdictions, including Cayman, to do so.
The signing was held after the seventh meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes, in Berlin.
The new standard for automatic exchange of financial account information in tax matters was presented by the OECD to the G20 finance ministers during a meeting in Cairns last September. It provides for exchange of all financial information on an annual basis, automatically. Most jurisdictions have committed to implementing this standard on a reciprocal basis with all interested jurisdictions.
The Global Forum will establish a peer review process to ensure the implementation of automatic exchange. Governments also agreed to raise the bar on the standard of exchange of information upon request, by including a requirement that beneficial ownership of all legal entities be available to tax authorities and exchanged with treaty partners.
“We are making concrete progress toward the G20 objective of winning the fight against tax evasion,” OECD Secretary-General Angel Gurria said after the signing ceremony. “The fact that so many jurisdictions have agreed today to automatically exchange financial account information shows the significant change that can occur when the international community works together in a focused and ambitious manner. The world is quickly becoming a smaller place for tax cheats, and we are determined to ensure that developing countries also reap the benefits of greater financial sector transparency.”