British Prime Minister David Cameron said in the House of Commons this week that he believes British overseas territories and crown dependencies should not be labeled “tax havens” since they have agreed to take the necessary action on tax information exchange with the United Kingdom, international tax cooperation and beneficial ownership earlier this year.
“I do not think it is fair any longer to refer to any of the overseas territories or crown dependencies as tax havens. They have taken action to make sure that they have fair and open tax systems,” Mr. Cameron said Monday.
The prime minister responded to a question by Labour MP Fiona O’Donnell about when “the 10 U.K. tax havens among the U.K.’s overseas territories and crown dependencies” will sign the multilateral convention on mutual and administrative assistance in tax matters.
The convention developed by the Organization for Economic Cooperation and Development and the Council of Europe was endorsed by the Group of 20 nations as key to ensure the rapid implementation of a new global tax standard governing the exchange of tax information during a meeting Sept. 5 in St. Petersburg, Russia.
Last week, the Cayman Islands government formally requested that the U.K. extend its membership in the convention to the Cayman Islands. The Cayman Islands and all other U.K. overseas territories and crown dependencies had committed to joining the convention in a meeting with the prime minister prior to the G-8 summit in June. Commenting on Mr. Cameron’s statement the Cayman Islands Ministry of Financial Services said, “We are glad that the U.K. has joined international organizations in the global tax and transparency arena in recognizing the soundness of the Cayman Islands’ business model, engagement and cooperation over the years. We are glad that our long-standing contributions to the U.K. economy have been recognized, as well.”
Cayman Finance welcomed the comments by the prime minister, stating that the transparency of the Cayman Islands financial services industry that had been built over the past four decades was finally being recognized.
“Clearly we appreciate the comments by the honorable prime minister. Given the facts, like the OECD/FATF reviews, we believe it is about time Cayman starts to receive some credit,” said Gonzalo Jalles, CEO of Cayman Finance.
A good, recent example of how the Cayman Islands compares to other jurisdictions, Mr. Jalles said, was illustrated in the OECD Secretary-General’s Report to the G-20 Leaders, issued in early September.
The report evaluated tax information exchange across 98 jurisdictions. It was based on nine criteria, giving a green, amber, or red rating for each, with green denoting the highest rating. Cayman is rated green across all nine categories. Brazil and the U.S. have two ambers, Russia has seven, and Canada, Germany, Spain and the U.K. each have one, Mr. Jalles noted.
Mr. Cameron also said Monday that it is very important that the focus should now shift to those territories and countries that “really are tax havens.”
“The crown dependencies and overseas territories, which matter so much – quite rightly – to the British people and members [of parliament] have taken the necessary action and should get the backing for it,” Mr. Cameron said.
Mr. Jalles added the prime minister’s statement reflects the reality of the situation in international financial centers.
“We hope other heads of state emulate his actions, and the international media starts to focus on facts rather than fiction,” he said.
It is the first time Mr. Cameron has expressed support for U.K. overseas territories and crown dependencies after putting “tax transparency” at the top of the agenda of the G-8 and the G-20.
Like Cayman, the crown dependencies welcomed the prime minister’s acknowledgement that the tax haven label does not apply to their jurisdictions.
Isle of Man Treasury Minister Eddie Teare said, “We do not consider ourselves to be a tax haven. The prime minister has now reinforced that message in very strong terms. It supports our view that the Isle of Man is a responsible business center with a competitive, clear and simple tax regime.”
Fiona Le Poidevin, chief executive of industry organization Guernsey Finance, said she hoped the prime minister’s comments would bring an end to Guernsey’s connection with the tax haven label. “The prime minister has rightly pointed out that we are not a secretive jurisdiction and that the tax haven label shouldn’t apply,” she said.
“Hopefully, his comments will not only bring an end to the label’s use, but also raise awareness among the wider U.K. public about the level of contribution that Guernsey and the other crown dependencies make to the U.K. economy. The U.K. Deputy Prime Minister, Nick Clegg, made similar comments last year when he pointed out that we were ‘an important gateway for the wider financial sector and indeed the economy in the United Kingdom’.”