“We’re becoming data
custodians so we have to
manage the data as efficiently
as possible.” Rick Gorter
eliminate the human element from an automated system. We are in
a different position from other jurisdictions because we do not have
a tax administration. Colleagues I speak to in other jurisdictions say
‘we’re setting up a FATCA or CRS unit so we’ll pull some people from
our tax administration and have them working in the international
team’—we can’t do that.
For us to receive data and then have to do what a tax administration
would do with that information before onwardly transmitting it, is a
challenge. We don’t ordinarily do that, so that comes back to your
point Leanne about what kind of people you need to do that work.
Cook: Each Cayman fund has one counterparty in the tax authority,
so would it not be possible to simply make a single holistic filing of
essentially the entire investor base for any given fund that classifies
by jurisdiction and fills out the balance of information that you as a
tax authority would require. Why would you need to make multiple
filings when it’s essentially sub-sets of the same information.
Nicol: Yes, again there’s an IT component to that and there’s also
how does it fit in with the CRS rules.
Collins: From an international reputation perspective, we helped
manage expectations in the beginning, when FATCA was rolled
out and people were frustrated that Cayman didn’t know what its
reporting was going to look like.
Having moved here from Canada with its very robust tax system I would
remind clients that Cayman is not bolting anything on to its existing tax
reporting. As a jurisdiction Cayman had first to create its tax reporting
infrastructure, then determine how its reporting was going to look, so
of course it was going to take time. Having strong service providers
who understand the issues and the intricacies of the jurisdiction helps
ensure Cayman is positioned properly on the global stage.
It made a huge difference with the funds that I work with once they
understood the whole picture. They were no longer as frustrated that
the solution wasn’t there right away because they could understand
the complexities of implementation if the tax system was not already
in existence.
As service providers within the industry, part of our role is to help
the international finance community better understand Cayman’s
position. With FATCA and CRS we were able to do that.
MacKay: The Cayman service providers are increasingly becoming data
custodians and as a consequence of that, the interaction with, whether
it be your department Duncan, whether it be CIMA, whether it be the
Economics and Statistics Office, the greater uniformity we can have from
a government perspective of the data fields that are required, the easier
it is for us to then import or export that data into your systems because
we are all fishing in a very shallow pool when it comes to expertise on
handling big data. We need to find a way to get that data flow efficient,
effective and in a way that it’s required at your end.
This needs to be without imposing a huge cost base on the industry
because that has to be passed on to the managers and investors
who are incredibly cost-sensitive and looking for a return.
Smith: I agree but I think the challenge is going to be the constant
moving targets. Once you’ve pinned down what the expectation is
from this avenue then something changes, so it’s really trying to keep
ahead of what each requestor wants so that we can then be prepared.
What is the latest on AIFMD?
Ebanks: In August 2015 we amended the mutual funds law and
security and investment business law so that the primary legislation
opened up the framework for AIFMD. In December 2015, we
CAYMAN FUNDS | 2017
“Our objective is to ensure
that we’re not having to go to
the industry each time looking
for different information.”
Heather Smith