This alert is intended to aid businesses that may have obligations to report information under the Tax Information Authority (International Tax Compliance) (Country-by-Country Reporting) Regulations, 2017 (“CbCR Regulations”), which were issued by the Cayman Islands on 15 December 2017 as part of its ongoing commitment to international tax transparency.
The Cayman Islands is party to the OECD Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports and the Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”). The CbCR Regulations implement, in the Cayman Islands, the OECD’s model legislation published pursuant to the OECD’s BEPS Action 13 Report (Transfer Pricing Documentation and Country-by-Country Reporting), which sets out the BEPS minimum standards.
The CbCR Regulations apply to qualifying multinational enterprise groups (“MNE Groups”). Broadly, a qualifying MNE Group is a collection of enterprises (“Constituent Entities” and each a “Constituent Entity”) that: (i) are tax resident in two or more jurisdictions and are related through ownership or control; (ii) had a total consolidated group revenue of US$850 million or more in the preceding fiscal year; and (iii) prepare, or would be expected to prepare, consolidated financial statements in at least one tax jurisdiction in which it operates. Any business unit or permanent establishment of an MNE Group will have notification and/or reporting requirements in the Cayman Islands if it is “resident in the Cayman Islands”, meaning: (a) incorporated or established in the Cayman Islands; (b) having a place of effective management in the Cayman Islands; or (c) subject to financial supervision in the Cayman Islands.
Constituent Entities that are resident in the Cayman Islands are required to notify the Tax Information Authority of the Cayman Islands (“TIA”) that they are members of an MNE Group and to confirm the name and jurisdiction of the MNE Group’s Reporting Entity (defined below), if not itself. Notification is a one-off process and does not need to be repeated annually. Any Cayman Islands entity which subsequently becomes a Constituent Entity must notify the TIA before the end of its fiscal year.
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International Tax Compliance: Country-by-Country Reporting Regulations Introduced in the Cayman Islands