The Cayman Islands (‘Cayman’) Ministry of Finance (‘Ministry’) has published advice on how entities affected by the new Country-by Country Reporting (‘CbCR’) regime (‘Entities’), should prepare for it including information on grace periods in the regime's first year of operation. The advice comes in advance of the Ministry’s formal CbCR Guidance and ahead of the launch by the Cayman Department for International Cooperation (‘DITC’) of the new CbCR Portal (‘Portal’), which is expected in March 2018. For more information on CbCR Reporting generally, see our earlier pieces Application Of The Cayman Islands Country-By-Country Reporting Regulations To Insurance And Captive Insurance Companies and Cayman country-by-country reporting by 31 March 2018 for Multinational Enterprise Groups.

Preparation for Notification and Reporting

-   Determination: Every Entity that is resident in the Islands must determine whether or not it is a Constituent Entity (‘CE’) of a Multinational Enterprise (‘MNE’) Group (‘MNEG’) for the purposes of the CbCR Regulations;. Generally the DITC expects that the Ultimate Parent Entity (‘UPE’) of a MNEG will confirm this information to its Cayman subsidiaries. Where a subsidiary does not already know the identity of their UPE they should check their Register of Members and Know-Your- Client (‘KYC’) and Anti Money Laundering (‘AML’) records. 
 - Centralisation: The DITC regime requires all CEs resident in Cayman to identify their MNEG’s Reporting Entity (‘RE’). and the RE then takes steps to give the DITC. This means the DITC receives a single notification for all Cayman resident CEs in each MNEG. 

Using the Portal: Notification
All REs of a MNEG with Cayman resident CEs must appoint for each CE individuals (who need not be Cayman resident) to be the CE’s Primary Contact (who may be an agent of the RE) and the Secondary Contact (who must be a fiduciary or management level employee of the RE).  The Primary Contact has to complete the two-part Notification process on the Portal, creating a single profile for the relevant MNEG for all its Cayman resident CEs. The two part process is:

Part 1:  Enter the name of the MNEG, the UPE, any Surrogate Parent Entity (‘SPE’), and provide contact information for and upload the Authorisation Letter of the Primary and Secondary Contacts. All the Cayman resident CEs for the MNEG must be listed in the Schedule.  Once Part 1 has been reviewed by the DITC it gives the Primary Contact the login credentials required for Part 2. This will include the MNEG’s unique ‘CbCR ID’. 
Part 2:  Upload the CSV file listing the CEs and provide for each their name, address, registration number/financial institution number, and confirm whether they are regulated by the Cayman Islands Monetary Authority (‘CIMA’).

Templates for the Authorisation Letter and CSV file will be included in the CbCR Guidance due out in February 2018.

Deadlines, Soft opening and grace periods
The DITC hopes its centralized approach will make the CbCR compliance process more manageable and efficient for all involved.  To allow MNEGs time to gather the information needed to proceed on a centralised basis the DITC will allow short grace periods for REs to gather all the necessary information to Register (‘Notification’) on the Portal and then use it to submit their Reports. 

Notification deadlines: For the Fiscal Year beginning on or after 1 January 2016 the Cayman Tax Information Authority will treat CEs as having complied with their Notification obligation provided they comply with the following deadlines:

a)        for Cayman resident REs -  15 May 2018; or
b)        for non-resident REs  - 30 September 2018. 

Using the Portal: Reports
If the CbCR Regulations require an RE to make its first CbC Report on or before 31 May 2018, then it must make its first CbC Report by 31 May 2018. It must include the MNEGs unique CbCR ID number,  be in the form of a prescribed XML file and made via the CbCR Portal. The Portal will not have a ‘Manual Entry Return’ facility for making CbC Reports.
The advice reminds Entities that Cayman has put in place legal mechanisms and penalties to enforce compliance, and that it has a webpage for further information - CbCR Legislation and Resources.
Solomon Harris
For further information on CbCR regulations, Notification and Reporting please contact Rob Humphries or Richard Addlestone at Solomon Harris.
The information contained in this article is necessarily brief and general in nature and does not constitute legal advice. Appropriate legal or other professional advice should be sought for any specific matter.


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