An independent assessment by the Global Forum on Transparency and Exchange of Information for Tax Purposes has concluded the practical implementation of international standards for transparency and tax information exchange has been “successful” in the Cayman Islands.
The so-called Phase 2 review by the largest international tax body found the application of Cayman’s legal and regulatory system was transparent and robust in practice. It followed a Phase 1 peer review which assessed Cayman’s legal and regulatory system on paper.
Cayman’s assessment was undertaken between July 2012 and January 2013, and the Global Forum published its findings in a Phase 2 Peer Review Report on 11 April.
The Phase 2 report states Cayman has addressed all of the recommendations contained in the Phase 1 report published in 2010 and therefore, all elements from the Phase 1 review are rated as being “in place”.
In addition “ownership and accounting information has been available in almost all cases where it has been requested”, according to the report.
The report confirmed that the Cayman Islands has broad powers to gather relevant information and that these have been successfully exercised to gather information for exchange purposes.
“Inputs received from the Cayman Islands’ exchange of information partners attest to the high quality responses provided by the Cayman Islands in a swift and timely manner,” the OECD noted in a summary of the findings.
Cayman’s competent authority, the Cayman Islands Tax Information Authority, is well organised with adequate internal processes in place for handling EOI requests, the OECD said.
Minister for Financial Services Rolston Anglin, said Cayman has had similar outcomes following other multinational, independent reviews of its structure. He noted that the Global Forum results should indicate again to politicians, advocacy groups and the general public that Cayman’s financial services industry operates within a sound legal and regulatory framework in regard to the exchange of information for tax purposes.
“We’ve developed, and we remain committed to enhancing, this framework not just because we know there’s a misperception about Cayman that stubbornly persists and is promulgated, perhaps innocently, by certain groups, but because we know that Cayman will have a stable economy only if we continue to attract good and responsible business,” he said.
“And every country – no matter how small, and regardless of its topography – should be allowed to build a strong economy, as long as it fulfils its responsibilities to the global economy”.
The only deficiencies pointed out in the report were “the lack of monitoring of ownership and accounting obligations [which] may affect the availability of information for all entities” and the difficulty “to enforce the availability of ownership information in the Cayman Islands in respect of bearer shares where this information is held by a custodian located abroad”.
The attorney general’s chambers, the Cayman Islands Monetary Authority, the Tax Information Authority and the Financial Services Secretariat provided assistance or information during the Phase 2 assessment. During the review’s on-island component, the assessment team also met with representatives of the Cayman Islands Compliance Association.
The Global Forum has with 119 member jurisdictions that are committed to implementing its standards.
The Cayman Islands is a member of the Global Forum’s Steering Group, which prepares and guides the forum’s work. It also is a member of the forum’s peer review group, which is responsible for the peer review process.