Cayman Islands Funds And US FATCA

On 18 March 2010, the Hiring Incentives to Restore Employment Act of 2010 added chapter 4 to Subtitle A ("Chapter 4") of the US Internal Revenue Code (the "Code"). The provisions in Chapter 4 are commonly referred to as the Foreign Account Tax Compliance Act ("FATCA"). US Treasury regulations providing guidance on the due diligence, reporting, and withholding obligations under FATCA were passed and came into effect in January 2013 (the "Regulations").¹

In summary, FATCA requires US withholding agents to withhold tax on certain payments to foreign financial institutions ("FFIs") that do not agree to report certain information to the US Internal Revenue Service (the "IRS") regarding their US accounts. A similar withholding requirement applies on certain payments to non-financial foreign entities ("NFFEs") that do not provide information on their substantial US owners to the relevant withholding agent. In both cases, the foreign entity would ordinarily be under no