US FATCA And Cayman Funds: Entity Classification

On 29 November 2013, the Cayman Islands government signed a Model 1B (i.e. non-reciprocal) intergovernmental agreement with the United States (the "US IGA"). The US IGA provides a framework for the implementation of the US Foreign Account Tax Compliance Act ("FATCA") in the Cayman Islands. More detail on the US IGA and FATCA and its impact on the fund industry in Cayman can be found in our previous update.

Although the US IGA has been executed, it will still need to be brought into force via enabling legislation in the Cayman Islands. While certain provisions of the US IGA will need to be expanded upon and clarified in the Cayman Islands enabling legislation, a number of other provisions in the US IGA require no further clarification and can therefore be acted upon now.