Cayman listed as 2nd worst tax haven

| 13/12/2016 | 25 Comments

(CNS Business): The Cayman Islands has been named as one of the worst corporate tax havens in the world in a new report examining the impact that tax-dodging corporations have on the world’s poorest people. The report, by the international charity Oxfam, lists Cayman in second place behind Bermuda because of the zero-rated corporate income tax and what the charity said is a lack of cooperation with international efforts against tax avoidance.Responding to this latest critical report, Financial Services Minister Wayne Panton accused Oxfam of making errors on its list and of exploiting misinformed public opinion, as part of an agenda to influence the public policy of G20 countries.

“It is unhelpful at best,” Panton said about the report.

“Indeed, it may be detrimental to the overall shared goal of combating criminal behaviour and addressing income inequality. Oxfam’s overriding error is their failure to differentiate between capital flows and profit shifting.”

Panton explained that to engage in profit shifting, a country must attract significant multinational corporations, or MNCs. “Cayman does not have this type of business. We do, however, receive capital flows that are used to the benefit of other jurisdictions, via investment projects,” the minister added.

But Oxfam stated in the report that there is a destructive race to the bottom on corporate tax.

This has seen governments across the globe slash corporate tax bills to attract business. But that competition between governments in every region of the world to offer ever more favourable tax rates to global corporations and the super-rich is damaging their own economies as well as those of developing countries and is not in the public interest, the charity pointed out.

“Tax revenues are needed to fund public goods and services, which contribute to the reduction of poverty and to the development of social and economic infrastructure,” Oxfam said.

It added that the growth in the use of tax havens means countries are finding it harder and harder to tax income from capital. Government coffers are declining and the burden of tax has shifted toward poorer workers and small businesses and away from powerful conglomerates and the world’s high net worth individuals.

“Ultimately, the most harm falls on the public, which is faced with the triple impacts of a higher tax burden, declining public goods and services, and having to subsidise corporate profits and private wealth,” the report found.

Oxfam names on-shore countries as well as offshore financial centres, such as Cayman and Bermuda, but the charity is calling on world governments and corporations to facilitate much more transparency over who owns what and who pays tax where on their earnings and profits. The charity also raised concerns that in the country-by-country reporting between government authorities the information is still not public. This means developing countries cannot access the data.

Oxfam stated that until information about earnings and tax is more public, civil society cannot hold corporations and governments to account for their tax practices.

But Panton said that the Cayman Islands has never had a direct tax system, choosing instead an indirect system that adequately meets the needs of its population.

“There is, therefore, no ‘race to the bottom’ and no tax incentives system designed to target non-resident individuals or legal entities,” he stated.

Pointing to the array of information exchange mechanisms Cayman now has, including all three of the OECD criteria listed by Oxfam as important, the minister said that for more than a decade, Cayman has required the collection, updating and maintenance of information on beneficial owners of the legal entities in the jurisdiction. This information has been exchanged with tax and law enforcement authorities.

“Oxfam’s insistence on public disclosure of beneficial ownership information as part of this criteria is disingenuous as it conveniently ignores valid concerns regarding human rights and the fact that the majority of countries do not have public registers of beneficial ownership information,” Panton said.

As the Cayman Islands supports the BEPS inclusive framework, and country-by-country reporting in particular, Panton said the jurisdiction has begun the work to consider the relevant aspects of the initiative for local adoption next year.

“With our demonstrable history of upholding international standards and engaging with foreign authorities on anti-tax evasion measures and against other serious crimes, it is wholly inaccurate for Oxfam to include Cayman on its ‘tax haven’ list,” he said. “Rather, examining the Oxfam definition of a tax haven and the methodology that they have chosen exposes the flaws in their reporting,” the minister added in defence of the local offshore sector.

See the Oxfam full report here


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Comments (25)

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  1. Anonymous says:

    These posts show that the Caymans have no interest in doing anything about the immorality of the rich having somewhere to move their capital to avoid taxes and hide shady and corrupt dealings. Tax pirates are parasites.

    • Anonymous says:

      And what exactly do you expect us to do about Delaware or Nevada or Wyoming? Cayman is flying the flag of quality/transparency/cooperation as high as we can and saying over here boys – follow us but they just aren’t listening. Sort of like you.

      • Anonymous says:

        Yet there is no controversy over the tax and corporation laws of Delaware, Nevada or Wyoming. (Your complaints don’t count as a controversy.)

  2. Anonymous says:

    First the worst second the best.

  3. Anonymous says:

    Oxfam is full of crap. Subject closed. Don’t even waste oxygen on that lot.

  4. Anonymous says:

    Bermuda beat us again???????

  5. Anonymous says:

    truth hurts cayman……the great christian nation….hahahhahha

  6. All Seeing I says:

    There will come a day when the horrendous consequences of what the financial industry in and of the Cayman Islands is completely guilty of and responsible for will ultimately be no longer hidden because like a cancerous tumour killing the world from the inside out, that festering presence will rise to the surface. What is visible today is only the beginning, that bitch called karma cares not one iota how many buildings called churches are put on the ground. nor does the One who is supposedly being worshipped inside of them. Bring on the rantings of the painted eye perpetraitors, the “captains of industry”, the pirates with neckties and those who worship at the altar of greed and evil in the darkest of rooms behind a fortress of secrecy and legalese psychopathy. It is not I to whom you will ultimately answer to.

    • Anonymous says:

      All seeking eye why are you so angry. Obviously by your statements you don’t have a clue about the financial services either in Cayman, in Bermuda or anywhere else on this planet. Please keep silent and we will think you are intelligent, open your yahbah and remove all doubt.

  7. Anonymous says:

    In the UK OXFAM is regarded as a bit of a joke amongst anyone who has even the vaguest interest in overseas relief work.

    In 2014 OXFAM was criticised by the UK Charity Commission for blatant bias after they published anti-government material that looked like it had come straight out of the Labour Party manifesto. In that same year reports revealed that 25% of donations to OXFAM (that’s the official figure – former volunteers and employees claim it’s actually much higher) went on salaries and running costs, including some fairly lavish entertaining.

    Although their CEO receives a comparatively modest (about £125K) salary that figure leaves out an undisclosed (it’s apparently confidential) package of perks that are rumoured to have included payment of private tuition fees in the past.

    Just this June OXFAM was attacked for using ‘boiler room’ tactics in their fund-raising drives, ignoring personal privacy and targeting elderly and/or vulnerable donors.

    This is a thoroughly nasty organisation that should have been put out of business years ago.

  8. Anonymous says:

    Cayman and Bermuda ought to file a claim against Oxfam. At some point we need leaders to confront accusers with facts and contemporary realities. It would be a good headline for us and we could benevolently drop the suit after a correction of the facts and a formal apology in the media.

  9. Anonymous says:

    Glad someone calm with knowledge is pushing back on these smear campaigns. It’s long overdue. We need to consistantly explain to the world in very simple words how Cayman adds value. That countries with 70,000 page tax codes are the opposite of transparent, and create the unequal playing field where only their wealthy can afford an advantageous interpretation. We aren’t responsible for the inhuman complexity of those volumes or perceived abuses. Some polite historical self-reflection would be appropriate.

  10. Anonymous says:

    The best way to combat criminal behaviour would be to have transparent corporate ownership registers a mandatory in all tax havens that do not want to be blacklisted. Hiding behind criminal agency to criminal agency information sharing just furthers the cycles of corruption and tax avoidance by the elite at the expense of the weak ordinary man. The Panama Papers showed how the proposed “reforms” would not stop such abuse in contrast to transparency. If people want to dodge their fair taxes then they must be made to be make that decision publicly and expect to be shamed for it. Many children will die of hunger today because of tax havens.

    • Anonymous says:

      No shortage of these non-specific adolescent sound bites implying wild unchecked criminality. We have to ask, is there any legitimate grown-up complaint about the dozens of TIEAs and Int’l regulatory/law enforcement exchange agreements that the Cayman Islands is party to (and early adopter of)? Or is it just that “journalists” lack authority to leaf through a catalogue of beneficial ownership (like almost anywhere else on earth)?

    • What do you mean by “their fair taxes”? If you mean the taxes they are legally obliged to pay to foreign countries in which they do business, then that has nothing to do with Cayman. Surely our concern should be limited to their obligations to pay their *Cayman* taxes, if any.

      It’s utter nonsense to say that many children – or indeed *any* children – will die of hunger because of tax havens. You do well to remain anonymous, matey.

      • Anonymous says:

        I miss you Gordo!!

        • Why, thank you! It’s good to see that the ruling MLAs have also come out against Oxfam. As a fierce opponent of the attempt by a former Government to impose a tax on incomes in Cayman, I can be relied on to defend our “offshore” tax-haven in all circumstances.

      • Anonymous says:

        Exactly Mr. Barlow. If those buffoons can’t collect their own onshore taxes that is their problem. They are not paying Bermuda or Cayman to collect for them. If companies are operating their offshore business in non- compliance of our laws then that is our business, which does not seem to be the case. We are not responsible to police the world!!

  11. Kim says:

    Well said, Minister Panton. My response would have been less measured! Oxfam just lost my support. Perhaps they should place the blame where it really belong; with the corrupt governments in third world countries instead of biting the hands of those who try to feed them.

    • Anonymous says:

      I’m unsure why you would limit your comment to third world countries. Unless you consider the Clinton Foundation third world.

    • Anonymous says:

      Good comment but OXFAM will never turn on their friends in those third world countries because it’s the corruption that creates the starvation that keeps OXFAM in business.

  12. Anonymous says:

    This sounds like someone at Oxfam was supposed to do some research but was busy going to fund raisers, conferences and gala’s so decided to just put down whatever people would believe.

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