Cayman signs UK tax deal

| 15/06/2009

(CNS): Leader of Government Business McKeeva Bush has signed a double taxation agreement (DTA) with the UK on behalf of the Cayman Islands Government. The deal reportedly protects against the risk of individuals or corporate entities being taxed twice on the same earnings. Stephen Timms, MP, who signed on behalf of the UK, said that the agreement includes unprecedented provisions for tax information exchange. It was not stated, however, if a bi-lateral agrement will follow this deal.

In a statement from the Ministry of Financial Services, Tourism & Development Public Relations Unit, it was announced that the LoGB had signed the deal today (15 June) in a ceremony at the UK Treasury.  The DTA, which is another type of bi-lateral tax agreement, is the first double treaty to be signed by the Cayman Islands. “We are very pleased to sign this agreement with the United Kingdom today as part of the Cayman Islands’ continued commitment to high standards of international cooperation and transparency,” Bush said.

Speaking about the UK’s advantage, Timms said that information exchange is a vital tool in ensuring that governments receive the revenues they need to resource the essential public services on which we all depend. “I would like to congratulate the Cayman Islands Government for signing up to an arrangement which includes unprecedented provisions for tax information exchange that meet international standards of transparency,” he added.

The agreement (see details here) places Cayman another step closer to the OECD’s requirement for a minimum of twelve agreements, which the new government has said it is committed to achieving not least in an effort to remove Cayman from the post G20 ‘grey list’. Cayman now has nine agreements in place. UK Permanent Secretary for Tax, Dave Hartnett said the information exchange provisions in this arrangement meet OECD standards of tax transparency.

Negotiations with the UK had been ongoing for a bi-lateral agreemen for several years but these had stalled. The previous government had accused the UK of constantly moving the goal posts with regards to that agreement and said that they had been seeking some form of commercial advantage for Cayman’s offshore industry before signing.

Speaking at what was the regular weekly press briefing prior to the election, the former Minister Alden McLaughlin explained that, while the government had been criticised for not signing treaties, the PPM administration had in fact been engaged in negotiations since they took office, but that did not mean they were able to be successful, adding that the government had to be very careful not to put Cayman at a commercial disadvantage. “We don’t want to put Cayman in a position of competitive disadvantage. We want to be compliant with OECD tax exchange standards but we don’t want to give away things other countries haven’t and then lose business,” McLaughlin said in April.

That view, however, has been disputed by some in the offshore community who questioned the wisdom of holding out on exchange agreements. They say that there is probably very little commercial advantage that the government can negotiate as in most cases Cayman is already getting all the business it is likely to get from a given nation, but that not having tax agreements is currently more of a disadvantage than the risk of losing a competitive commercial edge.

Richard Murphy of Tax Research UK, a critic of TIEA as ineffective in terms of cracking down on tax haven abuse, has dubbed this DTA treaty as useless frm the UK’s point of view. He said it was not a full blown DTA or a a full blown TIEA. "In fact the extraordinary thing is that the information exchange clause is far less onerous than a TIEA. So, for example, there is no reference to the need for the parties to be able to prove beneficial ownership of trusts, companies and other arrangements in their territories, which a TIEA should require," he wrote.

The tax watchdog said that the UK would have as many problems complying as Cayman and Murphy said it would do little to assist Gordon Brown in his camapign against tax havens.

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Comments (11)

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  1. Anonymous says:

    What Little Mac is signing is the work of PPM not UDP. Don’t make him fool you. 

  2. anonymous says:

    In response to ‘This is what the PPM jokers should have done’……..I take it you are convinced that the circus size lies told over and over by the UDP will work to ‘bring hope and prosperity back to the Country’. Firstly hope and prosperity had to have left the Country in order for the almighty UDP to bring it back….don’t know where you living but I never saw it leave until after May 20th….anyways, you will be safe for the next four years cuz if you believe the bull they fed you during their ‘campaign of lies’ you will believe anything! Oh my!

  3. Dred says:

    In all seriousness I do hope he is reading carefully these contracts.

    There is no doubt that we need to be more on the defense than offense as so many are gunning for our hide especially when we have people running around calling people who hold our livelihood in their hands INCOMPETENT.

    I just hope we don’t sign anymore stupid contracts like we have done numeroius times with CUC, C&W and others.

    His irradict behaviour scares me. The little drama episode of getting up in church and saying he’s changing Pirates Week still irks me. This is the man that is doing our negotiating.

    I just hope somewhere in all of this along with the financial mess we have been left in he grows a brain and see we need every dollar we can get right now. We can’t afford any messups that is going to cause us to loose legitimate business.

    There needs to be a decent balance between amobitiously signing agreements and protecting our clients and wellfare.

  4. Anonymous says:

    Oh my…..after 25 years he signs 1 kudos to him….

    • Anonymous says:

      This is what the PPM jokers should have done!

      But two failed at selling pencils and papers; one got hurt learning how to ride a bike; one retired before she was voted out; chucky and ossie got a strapping and exited stage left, and last but not least, kirt is still trying to figure out what is going on with his caribbean political consultant’s advice (he was apparently convinced the circus size election signs would work)

      • Anon says:

        "This is what the PPM jokers should have done!"

        This was all tee’d up by the PPM. McKeeva is only finishing what they started, you clown.  

      • Anonymous says:

        Providing that the OECD actually pays any attention to the agrements that are signed, I would like to thank Mr. Bush for signing the PPM negotiated agrement. It would have been more in character to have stopped the process and started over just to say "I did it". With the same assumption I hope that the other agrements already well underway are as easy for him to sign. Then lets see if he really has Cayman at heart and thanks the previous administration for the work that they did and leaving him so little to do.

        Maybe he will do the same thing when the benefits of the other projects start to bear fruit, e.g. better graduates arriving into the workforce.

        • Samson says:

          "Providing that the OECD actually pays any attention to the agrements that are signed, I would like to thank Mr. Bush for signing the PPM negotiated agrement."

          Enough of this PPM/UDP crap! Does it really matter who negotiated the agreements? If there are any benefits to these agreements, then it would be for the betterment of the CAYMAN ISLANDS as a whole!!! Get a life people and stop campaigning! Save your breathe for 2013 when we can actually measure the results of the parties in accordance with their 2009 manifestos!

          Good grief!

  5. Anonymous says:

    If I were the new elected government, I would just say, after seeing the true picture, say sorry, no thanks, I think that the only thing to fix this would take twins or somethiing…The wight ones, of course. Help us twinsies! hurwy….

  6. Anonymous says:

    Oh my, I wonder if you understood what you wrote or you just wanted to say you wrote something, perhaps you should have a re-think!!!

  7. SCARED says:

    Oh my…..I wonder if Mac understood what he was signing or he just wanted to say he had signed something….perhaps we should question him when he returns on the provisions of the agreement !!!