The Cayman Islands is set to sign up to the US Foreign Account Tax Compliance Act (FATCA), which could affect companies based in the islands and using the banking system, as the rules require stringent reporting on compliance. Last week the Cayman government said it would sign an intergovernmental agreement (IGA) with the Internal Revenue Service (IRS) for compliance purposes.

Cayman finance minister Rolston Anglin, made the announcement at the legislative assembly on 15 March.

He said: 'The global landscape in taxation is changing at an unprecedented pace. The modern cooperative and transparent jurisdiction will be one that uses automatic exchange of information mechanisms and multilateral approaches in tax matters, and that demonstrates effectiveness in the implementation of these measures'.

Anglin added that the Cayman Islands already has 30 tax information exchange arrangements (TIEA) in place with major trading partners.

He said he expects final negotiations on the mechanisms for exchange with the US and the UK 'to conclude quickly'.

Jersey recently announced an agreement with the UK government for a package of tax measures for the purpose of exchanging tax information between the respective tax authorities in an effort to combat tax evasion.

It joined Guernsey and the Isle of Man which already have similar agreements with the UK.