The Cayman Islands is still on the dreaded financial grey list despite signing another Tax Information Exchange Agreement Tuesday.
The Organisation for Economic Co-operation and Development’s grey list indicates jurisdictions that have committed to the internationally agreed tax standard, but have not substantially implemented them. Signing TIEA’s is a way of moving from the grey list to the white list.
The most recent TIEA was signed with Ireland at a ceremony held at the British Embassy in Berlin. Signing the agreement on behalf of the Cayman Islands was the Leader of Government Business and Minister for Financial Services McKeeva Bush.
‘The Cayman Islands is pleased to sign this agreement today with Ireland, marking another important step towards our ongoing commitment to international cooperation and OECD standards for transparency and exchange of information on tax matters,’ Mr. Bush said. ‘This signing will commemorate the beginning of what I am sure will be a highly productive and mutually rewarding relationship between the Cayman Islands and Ireland.’
The signing of the agreement brings the number of bilateral tax information agreements signed by the Cayman Islands to ten. Besides Ireland, Cayman has TIEAs in place with the United States, the United Kingdom, Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden. The OECD has put a threshold of 12 TIEA’s.
OECD Secretary-General Angel Gurría mentioned the progress of the Cayman Islands in a high-level ministerial meeting on transparency and exchange of information for tax purposes in Berlin on Tuesday.
‘The Cayman Islands has signed several TIEAs recently, including two here in Berlin, and is about to sign several more,’ he said, adding that Bermuda had recently moved over the 12 TIEA threshold.
Bermuda, one of Cayman’s key offshore financial centre competitors, moved from the grey list to the white list earlier this month.
Mr. Gurría said getting to the white list was about more than signing TIEA
‘While the 12-agreement threshold is a good indicator of progress, it should not be seen as just a numbers game,’ he said. ‘All countries must aim to have high quality agreements which are effectively implemented with all interested countries.
It is for this reason that the Global Forum will strengthen its peer review process to focus on effective implementation of the transparency and exchange information standards.’
The Global Forum will meet on 1-2 September in Mexico.
Mr. Gurría spoke about the need for all countries to have the ability to collect its due taxes.
‘In these difficult times, when governments need every dollar of tax revenue, when citizens need to be reassured that the tax burden is being fairly shared, when governments are striving to improve transparency in financial markets, it is essential that the international community moves forward,’ he said.
Mr. Bush spoke about Cayman’s efforts to get off the OECD’s grey list.
‘Our newly formed negotiation team has worked tirelessly to secure technical agreements quickly,’ he said. ‘Our signing last week of a Double Taxation Agreement with the UK, together with today’s signing is a direct result of their commitment and hard work.
‘We look forward to continuing these efforts and I am confident that we will be on the OECD’s white list very soon.’
A typical Tax Information Exchange Agreement only deals with the provision of information for tax purposes. A Double Taxation Agreement will also deal with other taxation matters as well as having a component for the provision of tax information.
Ireland’s Minister of State at the Irish Department of Finance Martin Mansergh expressed his country’s pleasure with the TIEA.
‘This is concrete evidence of the significant progress that has been made in recent months,’ he said. ‘Ireland welcomes the commitment of the Cayman Islands to implement the OECD standards of transparency and exchange of information in tax matters and their willingness to enter into tax information exchange agreements. The signing of this agreement represents a new chapter in relations between Ireland and the Cayman Islands.’