The Organization for Economic Cooperation and Development Friday removed the Cayman Islands from its grey list of countries that hadn’t implemented international standards for tax disclosure.
Also coming off the grey list is the British Virgin Islands.
The OECD said that both islands have signed agreements to exchange tax information with New Zealand, bringing to 12 the number of such agreements for both jurisdictions.
The development for the Cayman Islands comes after Leader of Government Business McKeeva Bush signed a Tax Information Exchange Agreement with New Zealand yesterday in Washington, DC.
Mr. Bush was confident the OECD would put the Cayman Islands on the white list.
‘For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre,’ he said. ‘The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.’
Mr. Bush indicated Cayman’s cooperation with the OECD would not stop now.
‘The Cayman Islands Government is looking forward to working in partnership with competent authorities in implementing agreements it has signed, concluding additional agreements with Cayman’s important trading partners in financial services and continuing its active role in the OECD Global Forum, to which it committed to in 2000,’ he said.
The Cayman government is also in advanced stages of negotiating further TIEAs with Italy, Mexico, Germany, France, Australia, Portugal and Canada. In addition, Cayman has enacted legislation and developed a mechanism that allows it to exchange tax information unilaterally with other countries.
Mr. Bush explained that this move to advance the country’s various international commitments in the area of international cooperation and regulation is part of the recently elected United Democratic Party’s manifesto pledge to enhance and protect the industry.
The OECD white list indicates jurisdictions that have substantially implemented the internationally accepted tax standard. As of Thursday, there were 44 jurisdictions on that list. The grey list indicates jurisdictions that that have committed to the internationally agreed standard, but had not yet substantially implemented those standards. The Cayman Islands landed on the grey list in April 2009 after a G20 summit in London decided to take action against what were considered tax havens.
The OECD’s next Global Forum is slated to take place in Mexico 1-2 September and there is some concern in Cayman’s financial industry that the organisation might move the ‘goalposts’ in terms of what it takes to appear on the white list.
The OECD’s secretary-general, Angel Gurria, said in June that the 12-agreement threshold was a good indicator of progress in adopting the international tax standard, but that getting on the white list should not just be a numbers game.
He said the Global Forum in Mexico would strengthen its peer review process to focus on effective implementation of the transparency and exchange information standards.