Opposition party lawmakers have expressed concern that recently signed tax information exchange agreements between Cayman and several countries may have put the Islands at a competitive disadvantage in the financial industry.
Leader of Government Business McKeeva Bush recently hailed the signing of a tax agreement with New Zealand that earned Cayman a place on the Organisation for Economic Cooperation and Development’s coveted white list of countries that have successfully enacted internationally recognised tax reporting regimes.
Although the former Minister with responsibility for international finance Alden McLaughlin congratulated government on the achievement, he essentially urged lawmakers to check the fine print.
‘One of the key features of the stance the government of which I was a part took was that there should be some benefits that accrued to the Cayman Islands in the context of these agreements,’ Mr. McLaughlin said.
‘It appears to me that the scope of Article 3 (of the tax agreements with Ireland and the Netherlands) breaks with that previous government policy,’ he said. ‘We have agreed now to provide information on indirect taxes.’
‘We ought not to place ourselves at a commercial disadvantage.’
Mr. Bush said the former minister was ‘trying to take a little credit out of one pocket and put it into another.’
The Leader of Government Business said the tax agreements have ‘restored Cayman’s credibility in the eyes of the international community.’
‘The agreements we have signed are standard agreements,’ Mr. Bush said. ‘All (tax agreements) have recorded that there will be negotiations immediately for commercial benefits, bar none.’
Mr. Bush also noted that negotiations for further tax information agreements had either been completed or were on-going with 16 other countries, in addition to the 12 already signed.
Mr. McLaughlin said he fully expected the Organisation for Economic Co-Operation and Development to continue raising the bar for smaller countries like Cayman.
‘We have to see this thing in the round,’ Mr. McLaughlin said. ‘These various initiatives of the major economies of the world…this whole business of listing countries is just a means to the end, which is being pursued.
‘Any policy which seeks only to appease the OECD at any moment in time does not serve Cayman’s best interests,’ he said. ‘They are already spinning other compliance webs.’
Mr. Bush agreed that signing the tax agreements were not the end-all solution for economic recovery. In fact, he noted that Cayman would likely have to look at an entirely new kind of business in the future if it wished to survive.
‘I’m not going to waste time in this honourable House trying to beat up the OECD,’ he said. ‘These Islands are being positioned for a new phase of growth. We are moving to become more of an international business centre.’
To do that Mr. Bush said Cayman’s government would need to adopt more business-friendly policies, including immigration reforms.
‘We would like to see Cayman become like Singapore. But we’re going to need a better immigration policy,’ he said.