In what some financial industry observers have called a ‘stalling tactic,’ a review of Cayman’s tax information and reporting schemes has been shifted to another committee within the Organisation for Economic Co-Operation and Development.
Cayman’s inclusion in the organisation’s so-called ‘grey list,’ or interim ranking level of financial centres that have committed to internationally agreed tax reporting standards, but which have not substantially implemented those plans yet, will not change for the moment.
The Portfolio of Finance and Economics in the Cayman Islands said there were some encouraging signs coming out of the OECD meetings held Thursday in Paris. The Islands’ ‘unilateral’ tax reporting scheme was cleared by the organisation’s Harmful Tax Practices sub-committee, but those will face further review before the OECD’s Fiscal Affairs Committee next month.
Unilateral reporting mechanisms refer to provisions in Cayman law passed last year that allow tax information assistance without negotiating bi-lateral information sharing treaties with separate countries. Bi-lateral and multi-lateral information sharing agreements generally take longer to iron out.
However, the Portfolio of Finance said it also had been made aware of new OECD proposals that Cayman consider certain multi-lateral agreements, but officials were unclear on the details.
‘We continue to make solid progress on our key initiatives to implement international standards in tax information exchange,’ Minister Alden McLaughlin said Thursday.
Others in Cayman’s financial industry were not so hopeful.
“Resigned cynicism is the immediate reaction to the latest shifting of the goalposts by the OECD in its decision,” said former Cayman Islands Monetary Authority chairman Tim Ridley. “The immediate result is that Cayman stays on the grey list.”
Mr. Ridley expressed concern about the decision to shift the matter to the Organisation’s Fiscal Affairs Committee.
‘If the decision goes against Cayman there is no appeal process,’ he said. ‘Even if (Cayman’s tax reporting measures) are ultimately found to measure up, a new cannon ball has been just fired into the game,’ Mr. Ridley added. ‘This is the ‘suggestion’ that Cayman also consider negotiating multi-lateral agreements, as well as the bilateral ones already well under way.’
“The astute observer will immediately sniff another delaying or diversionary tactic by the OECD and others.”