Both countries have opted to sign Model 1B intergovernmental agreements (IGAs), meaning that foreign financial institutions (FFIs) are required to report tax information about US account holders directly to the Cayman Islands Tax Information Authority and to the Costa Rican government respectively.
The Cayman Island Tax Information Authority, the sole channel for provision of tax-related information to other governments, will relay its information to the Internal Revenue Service in the US.
Additionally, the US and the Cayman Islands have signed a new Tax Information Exchange Agreement (TIEA), to replace the original agreement signed in 2001.
In June this year Cayman Premier Alden McLaughlin reiterated the country’s commitment to FATCA, an initiative which is becoming the global model for combating offshore tax evasion and promoting transparency.
Recent signatories include Spain, Germany, France and Switzerland. According to PWC’s IGA monitor , other jurisdictions believed to be in final negotiations include the Bahamas,Canada, Finland, the Isle of Man, Jersey, Guernsey, Italy, Jamaica, Malta and the Netherlands.
"Today's announcement marks a milestone in the effort to promote global tax transparency," said US deputy assistant secretary for International Tax Affairs Robert Stack. "These agreements underscore growing international cooperation in the effort to end tax evasion everywhere."
FATCA, enacted in 2010, seeks to obtain information on accounts held by US taxpayers in other countries. The law requires US financial institutions to withhold a portion of payments made to FFIs that do not agree to identify and report information on US account holders.
FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country.
