Friday, May 11, 2018
The Cayman Islands' country-by-country (CbC) reporting portal is now open, with the first CbC reports due from some taxpayers by the end of the month.
CbC reporting requires multinational enterprises (MNEs) that meet certain criteria to file a country-by-country report (CbC Report) with tax authorities. CbC reporting applies only to MNE groups with annual consolidated group revenue of not less than a specified threshold amount in the preceding fiscal year: in the Cayman Islands USD850m.
CbC reports are due within 12 months of the end of the fiscal year. As a result of an earlier extension, even if such would have been required earlier than May 31, 2018, the first deadline will be May 31, 2018. This provides extra time for those taxpayers whose fiscal year began in the first five months of the year in 2016.
The Finance Ministry has said a Reporting Entity resident in the Islands must make a CbC Report via the CbCR Portal even if that results in duplication because a CbC Report for the same MNE Group has already been made to another Competent Authority, for instance where the MNE Group appoints a Surrogate Parent Entity in another participating jurisdiction or where a Reporting Entity resident in the islands is also resident for tax purposes in another participating jurisdiction.
The CbC Report must be made via the CbCR Portal by uploading an XML file in the format prescribed by the OECD.
The CbC Report provides a breakdown of the amount of revenue, profits, taxes, and other indicators of economic activities for each tax jurisdiction in which the MNE group does business.
Further, the notification deadlines with respect to Constituent Entities of an MNE Group are as follows:
Under the notification obligation, the reporting entity of an MNE Group with constituent entities resident in the islands must appoint the individuals who will be the "Primary Contact" and the "Secondary Contact" for those constituent entities. The Primary Contact may be an agent of the reporting entity. The Secondary Contact must be a fiduciary or management-level employee of the Reporting Entity. The Primary Contact and the Secondary Contact need not be resident in the islands.
As part of the notification obligation, the Primary Contact must create a single profile on the CbCR Profile for their MNE Group by completing a two-part notification process with respect to all the MNE Group's constituent entities resident in the islands.
In part one, the Primary Contact must name the MNE Group, the ultimate parent entity, the surrogate parent entity (if any), provide contact information for the Primary Contact and the Secondary Contact, and upload the Reporting Entity's Authorisation Letter appointing the Primary Contact and the Secondary Contact with respect to all the MNE Group's Constituent Entities resident in the islands, which must be listed in the Schedule.
The Department of International Tax Cooperation (DITC) will review part one and then provide the Primary Contact with login credentials required for part two, including the DITC's unique "CbCR ID" for the MNE Group. In Part 2, the Primary Contact must upload the CSV file, which lists all those constituent entities and include each constituent entity's name, address, registration number issued by the General Registry (if applicable), type of entity, and FI number issued by the DITC (if a Cayman Financial Institution), and confirm whether or not it is regulated by the Cayman Islands Monetary Authority.