Cayman on new EU blacklist
(CNS Business) Updated: Government appeared to brush off the latest blacklisting of the Cayman Islands when it released a short statement on Wednesday at around 5pm following revelations by the EU that the jurisdiction had been cited as facilitating tax evasion.
“It is unfortunate that the EU black list unfairly downplays the significant strides made by Cayman, as well as the significant global accomplishments in the area of transparency,” stated Cayman’s Financial Services Minister Wayne Panton.
He said the listing was based upon national blacklists from European countries that were not major economic trading partners of the Cayman Islands and he believed they may not “be aware of Cayman’s adherence to standards, both in terms of our bilateral and multilateral agreements for exchange of information”.
With the exception of Bulgaria, Panton said, Cayman has tax exchange mechanisms with all of the jurisdictions that have blacklisted Cayman.
The listing was created by the European Union’s tax watchdog. This is the first list it has published of international tax havens, calling out 30 territories.
Cayman Finance, the private sector body representing the industry, also said it was “disappointed” to read that Cayman was included on the list “implying non-compliance regarding tax”.
“It is not clear what standards have been used by these 11 countries to come to such a conclusion, in particular when the Cayman Islands has exchange of information mechanisms in place with all but one of these countries,” the organisation said.
The publication of the list is part of an “Action Plan” to crackdown on corporate tax avoidance as well as put a stop to the practice of sweetheart tax deals for multinational companies, the EU had stated when it released names of the 30 jurisdictions. The European Commission said the rules that govern corporate taxation in the EU today were “out-of-step with the modern economy” and were “being exploited by some companies to escape taxation in the EU”.
The list ranges across five different continents. Cayman is joined on the list by other Caribbean countries, such as the British Virgin Islands, Anguilla, and the Turks and Caicos Islands.
“The Action Plan sets out a series of initiatives to tackle tax avoidance, secure sustainable revenues and strengthen the single market for businesses. Collectively, these measures will significantly improve the corporate tax environment in the EU, making it fairer, more efficient and more growth-friendly,” the European Commission said in a press release.
However, Cayman Finance claimed that Cayman has “consistently evolved and maintained its international tax cooperation practices to meet robust, balanced and globally implemented standards for regulation and cross border cooperation that apply equally to G20 countries and all International Financial Centres”.
Pointing to the FATF and Global Forum assessments, as well as Cayman’s early adoption of Automatic Exchange of Information arrangements with the UK and US, the industry body said it was confident that if the EU countries transparently and objectively evaluates the Cayman Islands tax cooperation regime against global standards, it would be removed from this non-compliant list.
Whether or not that will happen remains to be seen, as the EU is planning on re-launching the Common Consolidated Corporate Tax Base (CCCTB) and a framework to ensure effective taxation where profits are generated.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, stated, ”Corporate taxation in the EU needs radical reform. In the interests of growth, competitiveness and fairness, member states need to pull together and everyone must pay their fair share. The Commission has today laid the foundation for a new approach to corporate taxation in the EU. Member states must now build on it.”
The tax proposal is said to be in response to an even wider crackdown to the so-called “LuxLeaks” scandal that exposed deals with Luxembourg that allegedly saved some of the world’s largest companies like Apple, Pepsi and IKEA billions of dollars in taxes.
The EU set up a committee in February to probe national tax rules in the wake of the scandal.
According to Moscovici, the focus is now to create a single set of rules for companies in the EU to use in calculating their profits and to ensure that the taxes are actually paid. Another aim is increasing transparency, with the Commission considering whether to force companies to make certain tax information public.
“Our citizens can no longer tolerate that certain companies, often the most prosperous, avoid fair tax contributions and that certain tax regimes encourage them on this path,” he added.
The full list is: Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Vanuatu, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, St Vincent and the Grenadines, St Kitts and Nevis, Turks and Caicos, US Virgin Islands.
Category: Finance, Financial Services
And stories like this won’t help us much – http://www.telegraph.co.uk/news/politics/tony-blair/11688937/Cherie-Blairs-health-business-goes-spectacularly-wrong-as-company-goes-bust.html
Note this paragraph, “The company was financed through an investment fund set up by the women called the Allele Fund, which is based in the Cayman Islands, an offshore tax haven, and had planned to open 100 clinics in five years.”
Although it’s not mentioned in the story there is already a clear hint that not all the losses were strictly business-related.
Curious what you mean by “a clear hint that not all the losses were strictly business-related.” Can you elaborate a little more? Thank you.
What a 100 banks to investigate, then one must think that there’s a thousand people who are involved. I’m really worried now.
Cayman’s offshore financial services business only exists because the tax laws of the US, UK, and EU have permitted the tax avoidance structures that Cayman sells. Whether this continues to be the case is up to them, not you. All you can do is make your case and hope for the best. There will always be some loopholes to work with.
This is the time that the premier should be using the word treasonous.
How come Delaware, US was not included?
How come the City of London was not included!
Because it’s not an island? Seriously though, Delaware has US income tax, state income tax, and property tax, among other taxes, so even though it is little, it is very different than the places listed in the report.
The time is fast approaching when this constant attack by the EU will backfire on them. Revolt or War will soon be the order of the day in Europe and then they will stop worrying about Cayman and Bermuda.
stop pointing fingers cayman….look at your own game….
so Ireland and Luxembourg who had the sweet hearts deals to avoid corporate tax are not on the list, sheer bias
Does not change the fact that Cayman is on the list.
Guernsey is on but Jersey isn’t? Nor is the IOM? And Hong Kong? Who comes up with this tosh, and on what criteria?
Ireland the Channel Islands are omitted?
The EU has one foot in the grave and thank goodness for that.