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Italy places Cayman on ‘whitelist’

| 01/09/2016 | 2 Comments

(CNS Business): Cayman’s financial services industry received a boost last month when the Italian government revealed that it now has the jurisdiction on its whitelist. As a result of a European assessment of offshore financial centers, Cayman had ended up, local officials believe unfairly, on the blacklist of a number of European countries. The CEO of Cayman Finance, which represents the country’s financial services industry, said the move by Italy was positive news and a step forward for Cayman after the European Securities and Markets Authority’s (ESMA) recent deferral of its recommendation on the Cayman Islands’ application for the Alternative Investment Fund Managers Directive (AIFMD) passport.

Scott said inclusion on the whitelist will, among other things, allow Cayman Islands funds to invest in Italian securities such as bonds and securitisation instruments and receive interest payments gross of withholding tax. Cayman funds might also benefit from full exemption from Italian tax on profits attributable to them where they own more than 5% of an Italian real estate investment fund. Statistics show managers in the United States manage about 74% of net assets from Cayman domiciled regulated funds but Europe remains an important player in the alternative investment industry.

“We are optimistic that the pending legislation for the Cayman Islands AIFMD regime will be in place late 2016/early 2017,” Scott said. “Once the remaining legislation is enacted, we see no impediments hindering Cayman’s AIFMD passport application. The creation of this regime will offer wider opportunities for Cayman domiciled funds and managers in Europe.”

The Cayman Islands continue to make positive strides as a reputable international financial centre as it co-operatively develops legislation for the AIFMD compliant regime to market into Europe beyond the national private placement regimes.

Scott added that by putting Cayman on its whitelist Italy had signaled its recognition of the “robust framework to combat corruption, money-laundering and tax evasion” and “Cayman’s commitment to comply with international standards of transparency and exchange of information”.

The Cayman Finance boss also said it would enable Cayman funds, particularly credit and real estate funds, to provide much-needed inward investment into Italy. The granting of the right to receive interest income gross of withholding tax is very positive for Cayman funds investing in Italian securities. Cayman’s funds industry could play an increasingly important role in providing liquidity and credit to Italian businesses, to help offset the challenges faced by Italian banks as a result of the recent global credit crises, Scott suggested.

“Cayman funds have played this role with other major economies,” he said. “As a premier global financial hub and allocator of global capital and financing, Cayman provides a cost-effective, neutral platform to allow international investment to be made into economies that need that investment, while at the same time giving pension funds and other international institutional investors an opportunity to invest in a diversified portfolio of securities.

“The Cayman Islands enables parties from around the world who are domiciled in countries that may have differing laws, regulations, tax structures and customs to benefit from doing business with each other using Cayman as an efficient and effective global financial hub.

“This inward investment from Cayman will ultimately help stimulate economic activity, create much needed jobs and generate taxable revenue in Italy,” Scott added.

If Cayman is granted the AIFMD passport, Italian resident investors and pension funds would be able to invest in Cayman domiciled structures including many of the world’s best alternative investment structures.

“As Cayman funds continue to market into Europe, all stakeholders can take confidence that the Cayman Islands Government, the Cayman Islands Monetary Authority and the financial services industry remain committed to building a vibrant alternative investment funds industry that safeguards its investors but facilitates growth and good business,” Scott said.

The Cayman Islands signed a Tax Information Exchange Agreement with Italy on 3 December 2012 which came into force on 13 August 2015. To date, the Cayman Islands have signed 36 tax information exchange agreements, two inter-governmental agreements, namely with the United States and the United Kingdom and more recently a multilateral competent authority agreement to implement the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard to improve international tax compliance and the exchange of information.

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Category: Finance, Financial Services

Comments (2)

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  1. Anonymous says:

    Is this really significant from the country that gave the world the Mafia?

  2. Anonymous says:

    Congratulations to the PPM Administration and Cayman Finance. Job well done. Keep it up.

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