The idea that companies are using jurisdictions such as the Cayman Islands to pay less tax is misleading and the facts do not support the headlines.
That is the view of Gonzalo Jalles, chief executive of Cayman Finance, the organisation representing the financial services industry in the Cayman Islands.
Writing in a blog, Jalles cites a study published by the Tax Foundation, which he believes sheds light on how misleading the headlines are.
In 2010, US corporations made $470 billion abroad and paid to other governments $128 billion or 27.2 percent of that, the report shows. This percentage compares with an average between 1992 and 2010 of 26.4 percent and a low of 24.9 percent in 1999.
“So the statistics don’t just support the misconception of rampant abuse, but they tell us the apparent problem is not growing,” Jalles notes.
He goes on to say that another misconception is that places like the Cayman Islands are used by corporations to avoid paying taxes. But he notes that, of the over $12 billion in taxable income declared in Cayman in the year the study was done, US multinationals paid abroad $4 billion in taxes – 33 percent compared with 35 percent federal tax in the US.
“What this demonstrates is there is no indication US multinationals are using Cayman to achieve double non-taxation; the facts simply do not support what we are being sold,” Jalles said.
Gonzallo Jalles, Cayman Finance, Tax Foundation, Cayman