Cayman Finance has described a decision by the Netherlands to blacklist 21 jurisdictions including the Cayman Islands, breaking from the stances of other European Union member states, as “unusual” and an attempt to tarnish the reputation of the Cayman Islands.
The decision was partly made based on the low corporate tax rate in the Cayman Islands, something which Cayman Finance stressed is a subjective view.
It also noted that the action does not take into account Cayman’s demonstrated adherence to international standards for transparency or participation with the OECD’s BEPS Inclusive Framework and ignores Cayman’s engagement with the EU’s Code of Conduct Group over the last two years to address their concerns regarding economic substance.
“While discussions and negotiations relating to this and other blacklists are government-to-government processes with the Ministry of Financial Services taking the lead with regard to the Cayman Islands response to this development, Cayman Finance stands ready to support the Government as we protect, promote, protect, develop and grow this important pillar of the Cayman Islands economy,” said Cayman Finance CEO, Jude Scott.
“As such, we wholeheartedly reject this attempt to tarnish the reputation of the Cayman Islands and our financial services industry, which has been established as a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world benefiting developed and developing countries,” he added.
The body also noted that it is important to note that the Cayman Islands does not have double taxation treaties and therefore does not pose risk of aggressive tax avoidance. In addition, the Cayman Islands has had a Tax Information Exchange Agreement (TIEA) in place with the Netherlands since 2009, which facilitates the exchange of tax information to enable better tax collection by the Netherlands and support any investigations into alleged tax evasion. The Cayman Islands annually automatically exchanges information with tax authorities in over 100 countries under the OECD Common Reporting Standard framework.
The Cayman Islands is tax neutral and adds no additional tax to financial services transactions in its jurisdiction. Investee entities and investors are still subject to reporting and paying their home jurisdictions’ relevant taxes. In addition, the Cayman Islands meets or exceeds globally accepted standards for transparency and cross border cooperation with tax authorities and law enforcement.
At the same time that the Dutch government has taken this unusual decision to give the Cayman Islands this classification, international policy makers continue to recognise the vital role Cayman’s financial services industry plays as a strong partner in combating corruption, money laundering, terrorist financing and tax evasion, Cayman Finance also stressed.
The definitions of tax havens by leading international organisations do not apply to the Cayman Islands as the legal, regulatory and legislative basis for the Cayman Islands financial services industry clearly demonstrates Cayman is a transparent, tax neutral jurisdiction and not a tax haven.
Cayman Finance said it encourages authorities in the Netherlands to consider all the facts before taking such a position about a globally beneficial and well-regulated jurisdiction like the Cayman Islands.
Cayman Finance, Ministry of Financial Services, Jude Scott, Cayman, North America