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The Cayman Islands signed an intergovernmental agreement (IGA) with the United Kingdom on November 05, 2013, laying the foundation for the automatic exchange of financial information about UK taxpayers who hold accounts in the Cayman Islands.
The IGA is modeled on agreements made under the Foreign Account Tax Compliance Act introduced by the United States to ensure tax compliance among its citizens with international interests.
The Premier of the Cayman Islands, Alden McLaughlin, said that the government is working on setting up the legislative and operational framework needed to implement the IGA, and it will issue guidance on implementation.
"Entering into this agreement with the UK builds on our shared history of cooperation in tax and transparency matters; furthermore, it strongly indicates our mutual support for a single, global standard for the automatic exchange of information," McLaughlin said.
The Cayman Islands and the UK will monitor the outcomes of the IGA to ensure that it remains effective in tackling tax evasion without burdening financial institutions with added compliance costs, according to Wayne Panton, the Minister of Financial Services in the Caymans.
The IGA compels financial institutions in the Cayman Islands to report information on financial accounts that are "substantially owned by persons with UK tax-reporting obligations" to the Cayman government, which will in turn pass the information on to the British government.
UK Chancellor of the Exchequer, George Osborne, commented: "We welcome this signing with the Cayman Islands, the first Overseas Territory to sign this type of agreement with the UK. This demonstrates our shared commitment to tackling tax evasion.
"Alongside the significant investment that this government has made in HMRC's anti-avoidance and evasion work, these agreements will help them to clamp down further on those individuals who seek to hide their assets offshore. Our message is very clear: it is only fair that people pay the tax they owe. If you are trying to evade tax, we are coming after you."
In October the Isle of Man became the first British dependent territory to sign an agreement with the UK extending the automatic disclosure of tax information.
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