Implications Of FATCA For Cayman Islands Liquidators

What is FATCA?

FATCA or the Foreign Account Tax Compliance Act, is actually a section of the Hiring Incentives to Restore Employment (HIRE) Act passed into United States law in March 2010, that comes into force on 1 July 2014. It is unique in its extra-territorial reach, being an attempt to force financial institutions ("FIs") worldwide to report on their U.S. tax resident accountholders and imposing sanctions for non-compliance. The starting point is that all non-U.S. FIs should be forced to register with and identify their U.S. tax resident accountholders to the IRS or face a 30% withholding tax on gross payments from U.S. payors.

What is the Cayman IGA?

The Cayman IGA or Inter-Governmental Agreement between the Cayman Islands and the U.S. is an agreement to introduce domestic legislation in the Cayman Islands requiring certain FIs to report U.S. tax resident accountholders to the Cayman Islands Tax Information Authority (the "TIA"), which will then pass that