Premier: Cayman needs to keep defending offshore
Premier Alden McLaughlin with European Commission VP Valdis Dombrovskis in Brussels.
(CNS Business): The Cayman Islands will need to keep up its defense of the offshore financial services sector and maintain regular engagement with European Union leaders, in particular, the premier has said, because the recent delegation to Brussels found that politicians there remain “challenged in understanding our no-direct taxation regime”. Alden McLaughlin said that although his team was well received and everyone they met agreed that Cayman is highly compliant with OECD regulations, the lack of direct taxation is still causing a problem which needs to be explained to keep the islands off any new blacklists.
During his Budget Policy Statement on Friday, the premier outlined plans to fund the financial services policy functions and the regulatory services provided by the Cayman Islands Monetary Authority to keep pace with international regulatory requirements. But he also pointed to the need to keep up the defence of the sector as a whole among policy makers in on-shore jurisdictions.
During the recent trip to Europe, McLaughlin and Financial Services Minister Tara Rivers pushed the message on Cayman’s compliance efforts ahead of the proposed announcement in December of the jurisdictions that the EU considers to be non-compliant with global tax good governance standards.
“Everyone we met agreed that the Cayman Islands is highly compliant with OECD regulations, putting us in the league of countries such as Germany, Canada and the United Kingdom,” he said. “However, there were some who were challenged in understanding our no-direct taxation regime and with whom we took time to explain that the Cayman Islands has never had direct taxation, but we do have substantial indirect taxes.”
He continued, “We also explained that we do not have double tax treaties that allow for the shifting of tax liabilities, and businesses that operate in Cayman understand full well that they have an obligation to pay taxes due in their home jurisdictions.”
McLaughlin added that both he and Rivers came away from these meetings with a full appreciation for regular ongoing engagement. “To a man and woman, everyone we met with indicated the usefulness of personal engagement and noted their appreciation for our willingness to cross the pond to see them,” he said.
The premier also told the Legislative Assembly that he believed that revelations about the hacking of databases of international financial service firms was designed to influence the views of EU ministers on this proposed list of uncooperative jurisdictions.
Earlier this month the well-known offshore law firm Appleby admitted that its private client data was compromised last summer after the data found its way into the hands of reporters at the International Consortium of Investigative Journalists (ICIJ) and they revealed their intention to publish some of the information.
McLaughlin said this type of hacking demonstrated that the challenges to financial service jurisdictions such as the Cayman Islands are grave. They remained an issue, he said, “despite our exceptional performance in meeting, and in some instances setting, the global standard with respect to our measures in fighting money laundering, tax evasion, terrorism financing and other financial crime”.
This was further evidence, McLaughlin said, on why it is “imperative” that Cayman seizes every opportunity to engage with those that shape policy internationally with respect to financial services matters. “They need to hear the true story from us; they will not get it from the media,” he added.
Category: Finance, Financial Services
Mr Premier , if Cayman Islands are so compliant with OECD regulations, why would you have so much red tape to be cut ? If you’re talking why not tell the truth . Or blame hard to admit to .
We had better hope that Paul Manafort’s laundered millions do not turn up in the Cayman Islands. If some of the millions ended up here the full force of the American Treasury and Justice Department will be felt here next year. The Premier’s defending of the offshore will certainly fall on deaf ears in D.C.
Hopeless endeavour now the UK has gone down the Brexit kamikaze route. BOT offshore centres are going to be blacklisted without the UK to defend them in Brussels.