Tax deals delicate

| 07/04/2009

(CNS): The government has said that negotiating bi-lateral tax agreements is a sensitive business and not something that could have been hurried through because of the rhetoric surrounding the recent G20 summit since what they purpose is to also get something in return. “In good faith, when we negotiate tax exchange agreements we would expect to accrue some benefits for the Cayman Islands in the commercial area,” Leader of Government Business Kurt Tibbetts explained in the wake of the meeting.

The delicate balance of signing the tax information exchange agreements, now perceived to be highly beneficial, is also tied in with acquiring some commercial advantages for the Cayman Islands or getting the jurisdiction removed from country’s own black lists. Not wishing to elaborate on what the government might be seeking with the countries it is currently in negotiations with or what deals it has so far gained, Tibbetts said that without giving too much away the negotiations had focused on Cayman’s developing business in aircraft financing. He said that depending on the country involved, negotiations over commercial benefits would be different on each occasion.

Following the G20 summit, Minister 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. For example, in the dealings with the UK, the goal posts continued to change, McLaughlin said, and the government had to be very careful not to put Cayman at a commercial disadvantage.

“One of fundamental issueswe face is that countries have us on internal blacklists and the negotiations will be a way to get off the internal lists,” said McLaughlin. The new unilateral law has created a way for Cayman to offer and control the flow of information without the bilateral agreements and the negotiations that go with them but still left the door open for commercial agreements, he said.

The opposition had not signed any tax agreements when they were in office, the minister noted, which he did not mean as a criticism but said it illustrated that the UDP had acted on the best advice, just as the current administration had. “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. “

However, some leading members of the offshore community have questioned the wisdom of holding out on some 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 more of a disadvantage.

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