Panton navigates choppy ‘blacklist’ waters

(CNS Business): The Cayman Islands financial services minister has been doing the rounds in Brussels and London over the last week to persuade European officials that Cayman should not be on any grey or blacklists and to talk about the continued pressure from the UK for Cayman and the other territories to introduce a public register for beneficial owners. In the latest round of pressure on offshore finance, the EU has sent a letter to more than 90 countries, including Cayman, which it intends to assess for inclusion on a new blacklist of non-cooperative jurisdictions.

While Cayman tries to remain on message, that it is a transparent jurisdiction meeting the highest international standards, the assessment for this latest list may include zero corporate taxation or very low taxation as a black mark. That means, regardless of Cayman’s credentials on tax cooperation, it could still end up on the list.

As arguments swirl about whether or not the UK itself is, in fact, a tax haven, and in a climate where both Britain and the United States could also be the list, Panton was navigating the choppy political waters and trying to persuade European officials of the strength of Cayman’s tax transparency regime, its participation in the OECD’s base erosion and profit shifting inclusive framework.

The minister met with Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, at the end of last week and Panton believes Moscovici had recognised these strengths, which, he said “demonstrates the effectiveness of the hard work of my ministry”.

But a letter sent to the 90 countries asks the jurisdictions to engage in discussions with a panel of experts from EU Member States, who will screen jurisdictions against several criteria related to tax good governance, including the tax system. Panton said he had been reassured by Moscovici that the assessment would be a fair screening process.

“He was clear that no jurisdiction is being prejudged to be included on a list of non-cooperative jurisdictions that is intended to be created by the end of this year,” Panton said of Moscovici. “‘This was an excellent opportunity to raise awareness and understanding of Cayman’s tax system, and to assure members of the EC that our indirect tax system is not designed to negatively impact other jurisdictions.”

During his time in Brussels, Panton participated in a panel discussion on corporate taxation. Despite the ongoing challenges to the offshore financial sector from many different directions, he said his ministry was making progress with Cayman’s UK and EU counterparts because he and his staff constantly deliver the message at the highest levels about how Cayman’s financial services regime works, and how it benefits both Cayman and countries around the world.

Panton also met with Valere Moutarlier, director of direct taxation, corporate tax and international issues in the European Commission’s Taxation and Customs Union department, which is responsible for the EU’s proposed blacklist. He spoke with Werner Langen, a member of the European Parliament, who chairs the EP’s Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion, which is tasked with investigating the Panama Papers revelations and tax avoidance schemes, and Alain Lamassoure, an MEP for the southwest of France, who is a member of the European Parliament’s Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion.

“This certainly is not the first time that we’ve engaged with some of these individuals, but during this visit we significantly expanded the network of influencers that we are contacting,” Panton added. “The perceptions of Cayman are shifting positively because of the work that has accelerated during this administration, and the ministry is committed to continuing this high degree of strategic proactivity.”

But the pressure remains.

In London Panton met with more lawmakers and officials about proposed UK legislation on beneficial ownership, the OECD, and Brexit. He spoke with British MPs Andrew Mitchell and Nigel Mills about the UK Corporate Finances Bill, to which an amendment would impose public registers of beneficial ownership information upon the British Overseas Territories – a move the local offshore industry is desperate to avoid.

While Cayman has agreed to immediate and automatic sharing of beneficial ownership information with specific crime and tax authorities, it is fundamentally opposed to a public register as there are fears this would spell the end of the industry. A combination of a public register, the loss of access to the single market and the UK’s protection from hard-line moves by the EU with Brexit, the possible massive removal of repatriation tax and a slash of US corporate tax rates could have a very serious and detrimental impact on the sector that fuels Cayman’s economy and funds close to half of the government’s revenue.

Travelling with the minister were Chief Officer Dax Basdeo, Director of the Department for International Tax Cooperation Duncan Nicol and Director of the Department of Financial Services Policy and Legislation Michelle Bahadur, as well as the ministry’s head of communications, Angela Piercy. Cayman government’s London representative, Eric Bush, supported the ministry with its London engagements.

See draft letter sent to 90 countries by EU in CNS Library

Tags: blacklist, European Union, Featured, Pierre Moscovici, tax avoidance, tax haven, Wayne Panton

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