G20 blacklist still in question

| 01/04/2009

(CNS): As the Cayman Islands government waits to see if this jurisdiction will be black listed following the G20 summit tomorrow, the governments of the group of 20 nations are still disagreeing on whether there will be a list and how harshly to punish tax havens who don’t co-operate with their plans to crack open their secrets. Officials involved say leaders will agree tomorrow on new guidelines and outline sanctions for those that don’t sign on. But negotiations over whether to publish a blacklist are reportedly continuing.

 

The Cayman Government has written to both the UK the Prime Minster Gordon Brown and President Barack Obama lauded Cayman’s credentials, cooperation and importance to the global economy. The Leader of Government Business has noted that if the G20 countries make fair judgments Cayman should not be on the list as it meets all of the OECD standards.

“The Cayman Islands was one of the first jurisdictions to commit to OECD standards for transparency and exchange of information in tax matters,” he said. “The government has and will continue to do all it can to receive equitable treatment for the Cayman Islands, as by any rational analysis we are transparent and cooperative.”

However he noted that if the G20 countries decide to include legitimate jurisdictions in their blacklist there is littleCayman can do other than continue the relentless pursuit for proper recognition of its status as a responsible and cooperative international financial services centre.

Cayman’s vulnerability to the black list was confirmed when a list of countries for discussion under the tax haven label was given to the G20 finance Ministers meeting lastmonth which according to leaks included the Cayman Islands.

At present European leaders seem to be pushing for a harder line against tax havens, which they fear are siphoning off much-needed revenue amid the recession. According to international reports officials involved in the G-20 negotiations from Washington are trying to find a middle ground between the European desire for a blacklist and other G-20 countries with reservations. "Whether it’s a black list, a gray list or a white list hasn’t been decided yet," he said. But the official said the summit would produce rules that would include punitive measures for offshore tax havens that don’t cooperate.

Black list or no however, Cayman will need to prepare for global changes in regulation and more vigorous pursuit of people using jurisdictions such as our by the Internal Revenue Service. The IRS Commissioner Douglas Shulman has said that it is already hiring more investigators to go after offshore tax evasion. The Obama administration has also announced that it is creating a task force to suggest further ways to attack the offshore tax-avoidance problem. Shulman reiterated the administration’s support for pending legislation in Congress that would authorize the US’s own blacklist of uncooperative tax-haven countries, with the aim of raising pressure on those countries to share information about U.S. tax dodgers with the IRS.

Meanwhile, UK officials say they would like to see a specific set of sanctions against tax havens that don’t cooperate that would make them uncompetitive and difficult to operate. Sanctions could include denying tax deductions for business expenses; require increased disclosure by taxpayers and financial institutions of transactions that use such tax havens, and stop offshore jurisdictions from receiving loans from the International Monetary Fund.

Mike Froman Obama’s deputy national security adviser told UK reporters that there are ways of encouraging countries to adopt the standards that will emerge from the G20. “The G- 20 is looking at a number of different approaches,” he said adding that there is a consensus to, “expand the scope of regulation to any institution, market or product that’s systemically important to the international financial system and that could include hedge funds.”

He also said the G-20 countries want to “encourage” off-shore financial or tax havens to sign on to global accounting and transparency rules. “There are a number of things in the toolbox that might be available and that’s what’s being discussed this week,” he added.

 

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Comments (7)

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  1. Useless! says:

    The onus has to be on the Cayman administration to show what benefits offshore services provide for investment and capital flow in international fiance rather than moaning about "how can you hurt us" with more than a hint of entitlement.  Pathetic comments like "First do no harm" show what a terrible group of advocates for Cayman we currently have. 

  2. Caymanluvr says:

    I thought the letter that Mr. Tibbetts wrote to Obama (April 1 – Cayman Net News) was an April Fool’s joke.  I’m afraid the writing is already on the wall and, as is so often the case in Cayman, too little too late.  This should have been done a LONG time ago.

    • Anonymous says:

      I wish people would read the G20 news themselves, and stop reading what you wrote.  FYI UDP or PPM could not have stop the G20 outcome, they have to find somewhere to put the blame and this might be their out come.  It is not what Alden did or did not do.  STOP TRYing to fool people, April 1 is gone.    

  3. Anonymous says:

    does anyone understand how this whole thing relates to the madoff scandal?

    • frank rizzo says:

      It doesn’t.  Institutions, whether onshore or offshore, found to have aided the Madoff fraud will be subject to prosecution.  From the little I’ve heard this isn’t an "offshore" thing.

  4. Anonymous says:

     

    if they keep us off the blacklist that may save alden…then again maybe not!

  5. Anonymous says:

    hopefully we can avoid this. but fact that we are here with our backs against the wall is due to both the civil servants involved as well as the minister alden mlclaughlin. i hope the can do what is  required to resolve this as it could mean loss of jobs and revenues to our government.