Talk of the Cayman Islands inclusion on a proposed blacklist of tax havens had faded by late Thursday, but the prospect of negative impacts from the G-20 summit in London clearly had the Islands’ elected leaders worried.
‘I am praying at this point and time…that the results of the G-20 summit are not as negative as the possibilities are,’ Leader of Government Business Kurt Tibbetts said at a Thursday morning press briefing.
‘We have done everything that we possibly could do,’ Mr. Tibbetts added.
An outline of the agreement reached Thursday in London emerged late in the day. It included:
• Sanctions for non-cooperative tax havens and tougher world-wide financial regulations.
• Greater international regulation of hedge funds and credit ratings agencies.
• Stricter control and regulation of pay and bonuses for bankers.
• The poorest countries in the world would receive $100 billion in economic aid in addition to top up the $5 billion economic stimulus already agreed to by the G-20 nations.
• The formation of a Financial Stability Board to work with the International Monetary Fund with a goal of ensuring international cooperation and providing early warnings about threats to the financial system.
‘This is the day that the world came together to fight back against the global recession, not with words, but with a plan for global recovery and for reform and with a clear timetable for its delivery,’ United Kingdom Prime Minister Gordon Brown said. ‘We have agreed to tough standards and sanctions for use against those who don’t come into line in the future.’
According to a posting Thursday on the Financial Times of London website, a blacklist of four jurisdictions had been drawn up. Another 39 countries or territories were placed on the list of jurisdictions that have committed to internationally agreed tax standards, but which have not substantially implemented those plans yet.
The blacklisted four were Costa Rica, Malaysia, the Philippines, and Uruguay.
Cayman was one of the 39 on the middle list of committed jurisdictions where plans had not been substantially implemented. However, the Organisation for Economic Cooperation and Development noted that Cayman’s legislation regarding tax information exchanges was being reviewed.
‘People will increasingly see it as unsafe to be in a country that wants to declare itself a tax haven,’ Mr. Brown said in a statement to the G-20. ‘I think this is a major step forward. It is an announcement today of a list of countries that are not abiding by the rules.’
Mr. Tibbetts was asked whether the Cayman Islands had a contingency plan for the possibility of negative fallout from the G-20.
‘If that is the situation…then the first thing that would be needed to be discussed would be what criteria…will be required to be de-listed,’ he said. ‘They have to be able to say to you, ‘well, if you don’t want to be on the list, here is what you have to do.”
He refused to speculate about what agreements, if any, Cayman might not be willing to make in order to get on the Organisation for Economic Co-operation and Development’s ‘white list’. However, he said Cayman would readily accept regulations that would lead to a level playing field in the world economic markets.
‘Once everybody has to do it, it’s fine with us,’ Mr. Tibbetts said. ‘You can’t tell me that you need more regulations for the Cayman Islands but not more regulations for London and New York.’
Mr. Tibbetts also reaffirmed that the Cayman Islands recently completed tax information sharing agreements with a number of European countries.
Minister with responsibility for international financial services policy, Alden McLaughlin, went to Stockholm, Sweden, to sign some of the agreements this week.
‘These major developments, combined with our existing tax information agreements with the US, means the Cayman Islands has a combined total of 16 tax information arrangements with OECD member states to the required OECD standards,’ Mr. Tibbetts noted.
The tax sharing arrangements will allow overseas authorities to obtain tax information for the purposes of both commercial and criminal investigations.
A statement released Wednesday by the Organisation for Economic Cooperation and Development applauded the new tax information agreements.
‘These agreements mark a further significant step forward in international efforts to implement standards of transparency and exchange of information in tax matters,’ the organisation’s statement read.
Organisation officials also recognised Cayman as one of the first offshore jurisdictions to commit to new tax information standards in May 2000.
Caymanian Compass reporter James Dimond contributed to this story.