Storm warning for west from Cayman’s fiscal crisis
(FT.Com): The gods of global tax do not often have a sense of humour. Right now, however, they might chuckle at a little storm that has hit the Cayman Islands. In recent years, these pleasant Caribbean islands have prompted ire from social justice groups – and some western finance ministries – by playing host to numerous hedge funds and other financial vehicles. As an offshore centre, the Cayman Islands have been a handy place for financiers when they did not want to pay onshore taxes. But now the Cayman Islands are in crisis because they are running short of . . . er . . . tax revenues.
Last week its government secured a £38m ($61m, €42m) loan to prevent an immediate fiscal crunch. However, the UK government – which runs the external affairs of this British overseas territory – has told the Cayman government it must implement fiscal reforms urgently. Most notably, London is urging the Cayman Islands to widen its own tax base. That has some intriguing implications – not just for the Caribbean, but for the western world too.
Category: Business
What will they do when we join Jamaica and Cuba?
Long live Cayjamba!!!!!
Take that EU
"More visibly, Europe is preparing to implement a directive that would discriminate against hedge funds with headquarters outside Europe. Hence the fact that the Cayman Islands are so fearful that imposing taxes would prompt hedge funds to flee." – quote from the FT story referred to.
It is a sad fact that the rapidly approaching attack by EU and other G20 states on their competitors which they now call "regulatory havens" is something that the government is completely unprepared for. The government’s deafening silence on this issue makes this clear.
I realise that the statement that they are "unprepared" may suggest to some they are aware of this issue which has been headline news in the financial media for several months, but there is little evidence of this. I merely wanted to give the government and its advisors the benefit of the doubt.
Why would any company want to invest in Cayman when there is no evidence that the government is capable of providing a stable commercial platform in these times of rough competition? The onshore funds sector must be completely bemused/alarmed by what is happening, and not happening, in Cayman.
Undoubtedly CIFSA will at some point offer advice to government relating to its interests. Who will look out for the long term future of Cayman?