The Cayman Islands is one of 54 jurisdictions that have fully implemented legal frameworks for the automatic exchange of tax information, a main tool to fight cross-border tax evasion, according to a peer review report released by the Global Forum on Transparency and Exchange of Information for Tax Purposes.
The first peer review of the automatic exchange of financial account information found that relevant legal frameworks need improvement in 34 countries and are not in place at all in 12 jurisdictions.
Cayman, however, brought in relevant legislation and started to exchange information in 2017.
Under the Tax Information Authority Law and regulations, financial institutions were required to start using the procedures for new accounts at the start of 2016. For pre-existing accounts, financial institutions had to complete due diligence for high value accounts by the end of 2016 and for low-value accounts by the end of 2017.
Cayman signed the Convention on Mutual Administrative Assistance in Tax Matters, activated the associated CRS Multilateral Competent Authority Agreement, and put in place three bilateral agreements in 2017 to begin exchanging the information with partner countries.
According to the peer review report, Cayman exchanged account information with 57 partner countries in 2018 and with 64 jurisdictions in 2019.
Following the evaluation of the legal frameworks, a second stage of peer reviews will assess the effectiveness of the automatic information exchange.
The peer review report was presented during the first day of the annual plenary meeting of the Global Forum, which is bringing together ministers, high-level authorities and delegates from more than 100 member jurisdictions.
The three-day meeting is focusing on how the tax transparency agenda can promote the fairness of tax systems and strengthen tax-revenue collection.
Organization for Economic Cooperation and Development Secretary-General Angel Gurría said the Global Forum continues to be a game changer, according to a statement from the OECD.
“In spite of the COVID-19 crisis, it has successfully delivered on the global peer review process, offering further proof that automatic exchange is becoming the global standard,” he said. “Ensuring access to financial account information for tax administrations helps ensure everyone pays their fair share of tax, boosting revenue mobilisation for countries worldwide, and particularly for developing countries.”
In 2019, countries automatically exchanged information on 84 million financial accounts worldwide, covering total assets of US$10 trillion. About EUR107 billion (US$129 billion) in additional tax revenues have been identified through voluntary disclosure programmes, offshore tax investigations and related measures since 2009.
The Global Forum Secretariat said in 2020 it provided technical assistance to 59 developing country members, which included training of thousands of tax administration officials, to strengthen tax collection capacity worldwide.
“The battle for transparency is being fought on many fronts,” said Zayda Manatta, head of the Global Forum Secretariat. “We are moving fast towards full implementation of the existing standards, and taking every effort to ensure all our members benefit from them.”