The Cayman Islands is the latest offshore financial centre to sign an agreement to share information about the financial affairs of British taxpayers.
The Caymans joined Jersey, Guernsey and the Isle of Man as the latest signatory to the British-style FATCA agreement.
FATCA refers to the US Foreign Account Tax Compliance Act, which comes into force in 2014.
The US and UK versions both call on signatories to automatically reveal details of their taxpayer’s accounts, earnings and assets to national tax authorities.
The British government is negotiating similar agreements with other Crown Territories that also act as financial centres, like the British Virgin Islands and Gibraltar.
Tax avoidance
FATCA has seen a sea change in a crackdown on international tax avoidance.
Not only is the US tightening the rules for 6 million overseas expats, but citizens from other countries with cash and assets in the States will find the details reported back to their home nations as well.
Chancellor George Osborne said: “I can announce another large step forward in the battle to tackle evasion. The British government and the Cayman Islands will sign a tax information sharing agreement – the first with a Crown Territory.”
Osborne explained that information about British taxpayers held by Cayman financial institutions will be transmitted automatically to HM revenue and Customs, so that any tax that might be due is collected.
Many financial centres with British connections have been accused of a soft touch on tax that may have encouraged a rush to hide assets in the past.
FATCA has changed this and forced offshore financial centres to re-examine their business models to drop tax avoidance schemes.
Two more nations sign FATCA treaties
Meanwhile, two more nations have signed FATCA agreements with the US, announced Treasury officials.
The latest to agree to take part in the global tax sharing network are Trinidad & Tobago and Hungary.
Other Caribbean countries, including the Bahamas and Jamaica have indicated they will sign similar FATCA agreements.
The Trinidadian central bank confirmed FATCA had severe implications for financial institutions in the Caribbean and that most countries will eventually sign a tax deal with the US because the consequences of being locked out of the US money markets were too severe to consider.
Hungary has joined other nations in tackling tax avoidance for some time – and the government lists the task as a high priority, according to a recent statement.
The government is ready to sign a FATCA intergovernmental treaty, added the spokesman.
