Brown warns Cayman

| 13/04/2009

(CNS): According to a number of international media reports, UK  Prime Minister Gordon Brown has sent warnings to all of the British overseas territories and crown dependencies in the wake of the G20 meeting telling them to comply with the OECD standards in six months or face sanctions. Brown has reportedly written to all the dependencies and territories, setting a September deadline to sign agreements to share tax information with the authorities.

Cayman has reportedly received its own letter and CNS has contacted the leader of government business’s office regarding the content but is still waiting for a response.  Although Cayman has signed a number of bilateral treaties recently, it has also utilised the new Tax Authority Law which was passed in December to enter into a number of unilateral treaties. However, the CI government still does not have an agreement with the UK. In the wake oft he G20 summit, however, Tibbetts stated that the government was working on finalising an agreement with Britain.

The move by Downing Street puts the UK in the unusual position of threatening punitive action against its own dependencies and the countries which it is expected to represent. Brown has also signalled in the correspondence that he wants to tackle not just illegal tax evasion through personal offshore bank accounts, but also tax haven companies used for tax avoidance by corporations and super-rich individuals.

Seven British territories were named by the Organisation for Economic Co-operation and Development when it published, to coincide with the G20 summit, a list of havens that had either not agreed to, or not yet implemented, its international tax standards. Along with the Cayman Islands the grey list also contains Anguilla, Bermuda, the British Virgin Islands, Gibraltar, Montserrat and the Turks and Caicos islands.

Brown has also reportedly written to the Crown dependencies of Jersey, Guernsey and the Isle of Man, telling them that he expects rapid further progress to end tax and banking secrecy, even though all three islands were on the so called ‘White List’ which emerged from the G20 summit.

According to the Financial Times, Brown praises the progress made by the territories and dependencies but says he wants increased levels of tax transparency and has said he expects "genuine progress beyond the current minimum."

G20 finance ministers are due to review progress made against tax secrecy towards the end of this year but Brown is seeking to avoid charges of hypocrisy at home for failing to clamp down on what are seen as tax centres with ties to the UK. Turning his attention to tax avoidance rather than just tax evasion, he has encouraged the OECD to work on targeting avoidance with new standards for offshore tax centres. 

Michael Foot, a former Bank of England director who was in Cayman last month, has been commissioned to write a report on offshore havens and he will reportedly publish his interim findings next week on the UK’s Budget day, 22 April.

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  1. Chris Randall says:

    In 1936, in the High Court of England and Wales, in the case of The Commissioners for Inland Revenue v. The Duke of Westminster, Lord Justice Tomlin ruled:

     "Every man is entitled if he can to order his affairs so that the tax under a tax statute is less than it would otherwise be. Whatever the substance of the arrangements may have been, their fiscal effect had to be in accordance with the legal rights and obligations they created."

    In plain English: tax avoidence schemes are legal in the UK, or at least, England and Wales, so one has to wonder how far Gordon Brown (a Scot!) can take his crusade.

  2. Anonymous says:

    If global politicians are unhappy with avoidance "loopholes" in their tax code, they should modify their codes, not blame other countries?!?  Their tax code has nothing to do with the Cayman Islands!  Our islands accountants and lawyers are among the best in the world, and should not be targeted for legally optimizing a client’s obligations per the tax code of the client’s home jurisdiction.  Does Brown want to close all of the accounting firms worldwide too?  

  3. Anonymous says:

    It is amazing how Brown isattacking all of these territories. The Cayman Islands need to find our voice and speak as one, Government and Private sector. 86 million in bonus for AIG did not go to The Cayman Islands, it went to London, very few in The US know this. Brown is rattling his sword, but he has no teeth, he wants to see who will roll over and play dead! Speaking of roll over, I wish and hope to have status one day, but if not I will understand. I truly love these islands and have enjoyed them all my adult-life. On another note, if the US is out to get us, could we please stop sending the majority of our pension funds to their stock markets! Maybe if we invested in the EU markets they would play a little nicer with us? Stand strong and smart Cayman, wisedom often comes from the ones not shouting, remember that May 20th.

  4. Anonymous says:

    CNS has a journalistic obligation to properly differentiate between “legal tax avoidance” and “illegal tax evasion" in its reporting.  It has never been a crime to apply the tax code to legally mitigate ones tax obligations.  Evasion however is a criminal and willful subversion of the tax regime.  The two adjectives are not interchangeable in the accounting world.

    CNS: The two terms are used carefully in this article and it is made clear that they are not interchangeable. Can you point to an example where either of these terms are used incorrectly? If we agree with you, we will be happy to change.

  5. Vampire says:

    I don’t need status.  Just your money.  Thanks to roll over I have no interest in the long term interests of Cayman, because I am going to have to leave anyway.  So thank you for roll-over, it was the best incentive to not buy a house here and to put no roots down here whatsoever.  Which is great now because I can get off this sinking ship quickly with a big bag full of money.

    • Proud Caymanian says:

      I believe there are some really sincere expatriates in Cayman working hard for their money and contributing positively to our society; these are the individuals that deserve to remain here and make a life, but then you have the people like the person identifying themself as "Vampire" who I wish never set foot on this island.  I hope your seven years will soon be over- whatever "bag of money" you take with you will eventually run out.  We don’t need people here who think like you, so when you get rolled over, do us a huge favour and don’t come back.

  6. Twyla M Vargas says:

    STATUS

    ITS MY PARTY AND I CRY IF I WANT TO

    WE NEED MORE STATUS GRANTS.   If I feel safe enough to come to Cayman and live  with my family, bring my money, my cat and my dog,  adopt a  Cayman parrot, build my mansion,  set up garden and ground, set up my business, School, buy Yacht  and boat ramp..  Donate to CNCF, Museum Scholarships, and others, What do you think is my plan?.   I want to live here!!!!!!!!!!!!!!!.   Ever heard the Song ITS MY PARTY AND I CRY IF I WANT TO.   Stick a pin!!!.

    Listen up, these people are looking peace and tranquility, and a place to spend their money.  That is something very hard to find now-a-days.    What I cannot understand is why is it that USA needs to control the world.   Should I say  NEW WORLD ORDER? Stay safe.  Blessed

  7. Anonymous says:

    Why does Gordon Brown not just promulgate Orders in Council to sort everything out in the Cayman Islands and the other territories as the UK government wants?  These are British territories after all.  Why ask the territories to reform at a local level when he can take the decision at a national level on a consistent basis? Why is he delaying taking steps he believes to be in the national interest? 

  8. anonymous says:

    THE MONEY  and hedge funds etc from British over seas teritories  will migrate to Hong Kong  as China run things with 2 trillion $ of reserves  and USA and UK owe them millions and continuue to beg for more loans.  CAYMAN HAS A BIG PROBLEM  . BAHAMAS is independent  i do not hear  Gordon brown calling there name ? Were do we go from here ? may be more status grants to the persons that have large sums of $ in cayman? a few more Darts will save us from total economic colapse ? 

  9. Anonymous says:

    Surprisingly Obama and China prevailed at the G20 and saved is then. Brownand Sharknosy had intended to wound us beyond recovery. The cooler heads understood our indispensibility to the capital markets. We are a necessary lubricant engine.

    What Brown wants is to shut us down so his machinery at home will have a few more hours of life undisturbed by the competition that we are.

    The glaring hypocrasy as to who is black, gray or white is a delberate smoke screen…. to smoke us out as our voice is little even as our presence is strong.

    The proported annual leakage to offshore jurisdictions as ours pales in comparison to one quarter of loss generated recently from one company…AIG.

    Offshore jurisdictions such as ours lubricate the organ of international commerce. Our problem is, in simple terms, we are too successfull, and are hated for it, we talk too much about it without understanding the blowback of envy, we do not validate changing dynamics until too late, and the uninformed handle the power to be proactive…to protect us.

    Off shore finance is not going to vanish. It will be reformed further. It will be around. What the OECD wants is to reform us our of existence. If we are no longer in the busines it will be some one else. These guys just simply do not want it to be us, or Bermuda, or any island nation that do not experience the change of four seasons.

    We lack the understanding as a government to do what is required: continuous investment in market inteligence, lobby leverage and international image management. It cost money. You have to choose the most effective people, it is an intence unrelenting business. Without these components there is no success. None.

    There is evidence of significant irresponsibility as to our preparations for these regular face downs. There has been little evident investment over the last four years in intel gathering, on anti-tax heavan chatter, and trend interpritation. As such we have little to craft a long term strategy on.

    We are about to miss out on an opportunity to exchange views at the Summit of the Americas to be held in Trinidad in a few days. Is any one going on our behalf? There are important figures who will be in attendance who could be enlightened further as to our position. People of influence in the current Obama administration, who have Caribbean heritage and smattering of undersatnding as to why, how, and reason for us. I can think of three such with my little bit of home work.

    Island states such as ours who seek economic independence are being hedged in, bullied and choked of with our own complicity. London is happy with pointing us away from the financial services business, suggesting overtly, that we stick to tourism. Our tourism product is comming under further seige by way of a green tax scheduled to be effected shortly. This will translate into an additional cost of travel from England to the Caribbean. We are damned if we do. Let us stop be damned if we don’t.

    We need to not be some ones lunch. Gordon B is going to beat us about as he knows our voice is small. We need to help David Cameron beat him.

    Think.

  10. Linny says:

    What’s the matter you want CNS to sugar coat it like they use to do in the past Get Real my friend The truth may be and offence to you but it ain’t no sin us Thank the good Lord somebody  can tell it like it is and may the chips fall where they may

  11. Anonymous says:

    Gordon Brown has been treated roughly by the media, members of the EU and by his own parliment of late so his bold statements toward the overseas dependent territories is an opportunity for him to make a statement and not have those words shoved back down his throat.

    He didn’t look good at the G20 meeting.

  12. | Saharaka | says:

    New World Order here we come. Control the Money, Control the People. Simple concept really. I say we comply when ALL of EU does the same. Let’s see how far we can push back.

  13. Anonymous says:

    Sensationalized and factually inaccurate reporting – come on CNS, we’ll stop reading this dribble unless the quality of reporting improves.  Do you really think the Royal Navy is going to form a naval blockade around these islands for allowing taxpayers their homeland right to avoid taxes which are not legally due?  If you really beleive that, it demonstrates a complete lack of understanding of fundamental taxpayer rights. 

    CNS: I think you should read the article again and this time try to understand it.

  14. NHB says:

    When as a country are we going to grow some balls if we do as told we lose if we don’t do as told we lose we might as well go out figthing and tell the UK to go stuff themselves and the EU as well with there preditor tax demands the service we are providing to the world isn’t wrong if someone wish to use it let them if not leave us be about making a way of living in this country