Cayman targets white list

| 04/04/2009

(CNS): Although disappointed that the Cayman Islands is on the grey list of countries which came out of Thursday’s G20, the government has said it is not surprised but believes that the jurisdiction will migrate to the white list soon. Speaking at special post G20 press briefing Minister Alden McLaughlin said given what the OECD has said recently about Cayman’s new legislation that allows universal tax exchange Caymanis expecting to be re-listed along side the crown dependencies once the organisations has reviewed that new law. (Left:Alden McLaughlin in Sweden at signing of latest bi-lateral tax agreement)

 

“While we are disappointed that we are not on the white list I can’t say I’m surprised,” said McLaughlin. “The rhetoric surrounding the G20 summit created an environment from a geo-political perspective that made it virtually impossible for us to end up on the white list as that would not fit with the current perceptions about tax havens. The list is also full of anomalies. The crown dependencies are the only offshore countries on the list and some countries, such as Hong Kong, are not even mentioned on any list.”

McLaughlin said he believed that Cayman falling in the grey area could well have been a result of the horse trading that may have gone on to keep powerful countries on board with the wider goals. 

However, the crucial issue for Cayman now he said is that as the crown dependencies — direct competition to Cayman are there – this jurisdiction needs to be on the white list as soon as possible to maintain Cayman’s competitive advantage. McLaughlin said given what the CI government has been told by the OECD he was confident that it could happen as Cayman has already done all it needs to do to qualify for the white list despite the criteria being somewhat vague.

“I am satisfied that there is nothing the Cayman Islands could have done at this point would have given us a different result,” McLaughlin added. “The really positive thing is the acknowledgement by the OECD for our tax information exchange law.”

He explained that the passage of the Tax Information Law in December could not have come any sooner as it was in itself an innovative law which Cayman devised. He said Cayman came up with the mechanism for unilateral agreements only last year as part of its work with the OECD’s Level Playing Field sub-committee group and he said the only other country at the moment to have utilised this new mechanism by passing the law besides Cayman is St Kitts.

 In a foot note to the progress report there are positive indications that the OECD will see the new law as meeting its standard for tax exchange.

“Cayman already has the greatest number of tax agreements with other OECD countries than anyone on the grey list,” McLaughlin added. “We have every reason to believe that once the rhetoric dies down Cayman will migrate to the white list.”

He said comments from the OECD coupled with the positive statements by the German and Irish authorities was all very helpful  and with more discussions for bi-lateral agreements pending Cayman was in a very good position. He said however, the biggest disappointment was the UK’s public silence.

“What is truly disappointing and the main bit missing from this picture is the fact that the UK didn’t make a positive statement about the progress on the bi-lateral agreement and information exchange negotiation. They have been very complimentary in private but it is not willing to make public statements.  That is very disappointing. It seems they have pressed for the crown dependents but as expected given the environment of the G20 not for the Cayman Islands.”

He said that despite the fact that Cayman was not really the kind of jurisdiction that specialised in tax avoidance the rhetoric would be unlikely to stop and once we met the criteria to get on this list there was still the issue of the future green OECD list which Cayman wants to get on.

“Tax avoidance is not the area where Cayman’s present business is based,” McLaughlin said. “Cayman has never had direct taxation but what that does is present a platform that’s useful for structuring sophisticated transactions without a new layer of tax. We offer the benefits of what is now termed a tax neutral jurisdiction and we are a sophisticated, well regulated offshore financial centre.”

He lamented the image of the “suitcases full of money” which he said was part of a distance past a time when things were less regulated and the systems not as robust. “It is however taking us an incredibly long time to shake that image,” he added.

 

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Comments (9)

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  1. anonomous says:

    If the Minister had concentrated more on the kids and less on the principals we would be in better position today.

  2. Anonymous says:

     “Tax avoidance is not the area where Cayman’s present business is based,” McLaughlin said. 

    Actually, "avoidance" is our lifeblood.  "Evasion" is where the problem lays.  Those are two very different things.  The agreements where earlier recorded as unilateral rather than bilateral, what has changed to improve Cayman’s lot?!?   

  3. Daniel says:

    Question guys: Why is Alden the only person negotiating on our behalf. Don’t we have other persons who are more than capibable to negotiate on our behalf. What happed to Mr. Ridley, he sounded like a reasonable man. Why was he not invited to accompany Mr. Alden? Sometimes we have to put our egos and pride aside and do what is in the best interest for the country on a whole.

    Not to be disrespectful, but Mr. Alden does not seem like a capable man to me. He can bearly speak (sorry but it is a fact). This does not give me confidence, if you cannot articulate your word properly here in your own country, what makes it different over there.

    And why now, so late in the game? There appear to be alot of bi-lateral agreements being signed now so late in the game. Did we take enough time to think this through, or will we find that it will all come back to hunt us in the future? Will we find ourselves in deeper water then?

    It appears that we have once again acted rash and did not take enough time to consider what we are doing.

    • Anonymous says:

      Very simple.  Electioneering.

       

      He didn’t do squat for 4 years now he needs to "appear" as if actually doing something on a bill that pass the senate in 2007.

       

       

       

      • Anonymous says:

        I’m not sure on this individual can say that Minister McLaughlin did nothing for the past four years…… I have spoken to parents who kids attend the government high schools and they have spoken very highly of the changes he has made.

         I will be voting for PPM on May 20th as I feel this Government deserves another term.  This Government has done a lot in the past four years unlike the previous Government that only looked out for one district on the Island.

         

  4. Knal N. Domp says:

    Every offshore jurisdiction is in competition with us, a fact that is now even more important post-G-20. My point is that Aldon, as Minister in charge of this stuff until the next Cabinet, seems to be the only person acting as an international spokesman for the Cayman Islands and as such, needs to be factually correct. Anything less may be construed as unprofessional, and maybe a bit Slovakian…

  5. Anonymous says:

    Knal N. Domp is correct. We started our olympic dash way too late to place. There is a school of sheep-mother load of anomalies…little logic to the qualification for white listing. The China inclusion suggest a calculated validation of the might of one who is the worlds largest holder of debt. Do you for an instance believe that it would have been otherwise?

    You cannot be pronouncing "we are praying…." you cannot beg these guys. You have to be wise but dignified in demand for fair play. You cannot afford to convey fear or subservience. You will never achieve head way that way.

    Credit has to be attributed to Bush who confidently bellowed back (HELL NO!) at the OECD through courts the last go round. That still forms a part of their memory. Without that fact of history, knowing we are very capable of a justified push back using the courts…we would have been blacklisted again for no other reason but that they think we can be bullied.

    Take no comfort in the grey list. Our radiation treatment is on the way even as there is no sign of cancer. We better be ready to spend on the courts.     

  6. Knal N. Domp says:

    Wrong (again), Aldon. The Crown Dependancies (Man, Jersey and Guernsey) are not the only ‘offshore countries’ on the OECD List- Mauritius, Slovak Republic, Malta and the United Arab Emirates are also all offshore and appear on the white list. Aldon, have a squizz at Footnote 2 on the List- you will note that Hong Kong is in fact mentioned by its statusas a Chinese Special Administrative Region (the other being Macau), and therefore is technically grey-listed. I do agree though that the List has some interesting anomalies in addition to the gymnastics that allowed China to make it onto the white list- Netherlands, for instance, appears in both the white and grey lists (a Dutch trait of being two things simultaneously- I should know!) and that whilst the UAE is white-listed, UAE-member Emirate Bahrain is grey-listed. Interesting…

    • Anonymous says:

      Knal, clearly it gives you a kick to be pedantic. I am sure the Minister can read. The point he is making relates to those jurisdictions in direct competition with us. I hardly think the Slovak Republic qualifies.