Will be ahead of G8 Summit
The Cayman Islands government anticipates it will attend a “three Ts meeting” with the UK government in the run-up to the G8 summit on 15 June.
The meeting title refers to trade, tax and transparency – the UK agenda for the G8 Summit – and is likely to address tax information exchange, company secrecy and other financial transparency issues raised by the UK government in recent months.
UK newspaper The Guardian reported on Tuesday, 4 June, that Prime Minister David Cameron had “summoned” the UK’s overseas territories and Crown dependencies to a meeting one week prior to the summit of G8 leaders, which will be held in Northern Ireland.
Cayman Islands Premier Alden McLaughlin said a local delegation is likely to attend a meeting, but cautioned that the situation is changing all the time and “the nature of the meeting is still very much up in the air”.
Mr. Cameron wants the British territories to sign the Convention on Mutual Administrative Assistance in Tax Matters, but the plan faces hostility from the territories, The Guardian reported. The Cayman Islands government has been in contact with the other overseas territories and Crown dependencies on the topic, but Mr. McLaughlin did not comment on the outcome of the discussions.
“We’ve been addressing those issues and that situation is very fluid. We’ve had a conference call with virtually all of the overseas territories and Crown dependencies yesterday [Monday],” he said. “I don’t want to make any statements, which indicate any sort of commitment, except to say that we are very engaged in the process.”
The convention developed by the Organisation for Economic Cooperation and Development provides for all possible forms of administrative cooperation between states in the assessment and collection of taxes, in particular with the aim of combating tax avoidance and evasion.
It is a tax information exchange and enforcement mechanism that comes in addition to OECD tax information exchange agreements, which are bilateral and upon request only. The Cayman Islands government has signed TIEAs with 31 countries.
The convention on mutual assistance in tax matters, in turn, can serve as a basis for other multilateral forms of information exchange including on request, spontaneous and automatic. It also facilitates joint audits, simultaneous tax examinations, tax examinations abroad, assistance in recovery and the service of documents.
The Cayman Islands already reports the aggregated interest income from bank accounts belonging to European citizens to the respective tax authorities in Europe under the EU Savings Tax Directive.
In April, the Cayman Islands government also committed to participating in a G5 pilot programme that is going to be modelled on the US Foreign Account Tax Compliance Act, a law governing the reporting of bank account information of US taxpayers by banks and other financial institutions outside the United States.
It is expected that the G5 pilot will seek additional data and bank account information such as names, addresses, date of birth, account numbers, account balances and details of payments made into the accounts. The pilot programme is also likely to demand the sharing of information on accounts held by entities such as companies and trusts and require that the ultimate beneficial ownership of companies and trusts be identified.
In a letter to all Crown dependencies and overseas territories, Prime Minister Cameron wrote in May that in addition to processes governing the exchange of information, the quality and accuracy of the information is important. “We need to know who really owns and controls each and every company,” he wrote, saying this would require public registries available to law enforcement and tax collectors.
In the letter, Mr. Cameron also urged the territories to join the Multilateral Convention on Mutual Assistance in Tax Matters.