US bills could impact Cayman

The timing of a Cayman Islands Government delegation, led by Leader of Government Business Kurt Tibbetts, to Washington D.C. from 4-6 March has proven fortuitous with the tabling of two anti-tax haven bills Monday.

Among other things, the delegation intends to meet with Congressional representatives who are also members of the Ways and Means, House Financial Services, and Senate Finance Committees, which have jurisdiction over legislation in taxation, financial services, trade and international cooperation.

Delegations from Switzerland and the UK are also in Washington to discuss the same subjects.

‘While we have already well-developed channels between bodies like our Tax Information Authority and the IRS and between the Monetary Authority and the SEC, we hope to build on our relationships on the lawmaking and legislative side,’ said Portfolio of Finance Public Relations Director, Ted Bravakis.

Reuters reported Tuesday two bills offered on Monday by Democrats in both the Senate and the House of Representatives are targeting offshore tax havens used by Americans – which includes the Cayman Islands.

The Senate bill expands on one co-sponsored last year by then-Senator Barack Obama and Senator Carl Levin, but which never passed into law. Similar legislation was introduced in the House by Texas Democrat Lloyd Doggett.

Mr. Levin has made a name for himself as a colourful activist seeking to crack down on tax dodgers.

“Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system,” said a statement from Levin.

“We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year.’

A press release states the expanded provisions of the bill would treat foreign corporations managed and controlled in the United States as domestic corporations for income tax purposes.

It would also close an offshore tax dividend loophole that enables non-U.S persons to dodge payment of U.S. taxes on U.S. stock dividends; and expand the tax return reporting requirements for passive foreign investment corporations to include U.S. persons who don’t own a PFIC, but have formed, sent assets to, received assets from, or benefited from a PFIC.

If passed, the outcomes may have a significant impact on Cayman, and Mr. Bravakis noted that this visit is just part of ongoing efforts to raise Cayman’s profile in a sometimes hostile climate.

‘We want to make sure whatever discussions are taking place that involve tax policy in relation to offshore we want full-board cooperation channels with the US government,’ he said.

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