Cayman named on new EU blacklist

The Cayman Islands is on a list the European Commission has published of the top 30 noncooperative jurisdictions that are blacklisted by at least 10 European Union member states. Others on the list include Bermuda, the British Virgin Islands, Hong Kong, Guernsey, Liechtenstein and Monaco, as well as other offshore financial centers.

To determine noncooperation, the EU member states used a mishmash of individual methodologies ranging from compliance with transparency and exchange of information standards to the absence of harmful tax measures and other criteria.

The list, published on the website of the EU Tax and Customs Union, reflects how countries and territories around the world apply standards of tax governance, including “transparency, exchange of information and fair tax competition.”

The analysis was based on work done by the Platform for Tax Good Governance and information provided by EU member states.

The platform was formed by the European Commission to assist in developing initiatives to promote good governance in tax matters in third countries, to tackle aggressive tax planning and to identify and address double taxation.

It brings together tax authorities from EU member states and 15 representatives from businesses, tax professionals and civil society organizations and thus unites unlikely bedfellows such as the Tax Justice Network, Oxfam, the International Chamber of Commerce, the Dutch Association of Tax Advisers and the BDI, a lobby organization for German industrial companies.

It is not clear what the purpose of the list is, but the European Commission said it would be updated once a year to reflect changes to the individual blacklists of member states. Cayman was blacklisted by Belgium, Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal and Spain. The Cayman Islands government said it is aware that the list is based on individual blacklists in EU member states, but emphasized that Europe’s major economies, which have been rated similar to the Cayman Islands on upholding international standards on transparency, do not list Cayman.

“The national blacklists that have resulted in this overall blacklisting are primarily generated by European countries that are not major economic trading partners of the Cayman Islands. These countries therefore may not be aware of Cayman’s adherence to standards, both in terms of our bilateral and multilateral agreements for exchange of information,” said Cayman’s Minister of Financial Services Wayne Panton.

“It is unfortunate that the EU blacklist unfairly downplays the significant strides made by Cayman, as well as the significant global accomplishments in the area of transparency,” he said.

Cayman Finance noted that while Cayman has few business relationships with the countries that blacklisted it, Cayman has established tax information exchange mechanisms with all of them except Bulgaria.

“It is [therefore] not clear what standards have been used by these 11 countries to come to such a conclusion,” the organization said in a statement.

Instead, Cayman Finance pointed to the evolution of Cayman’s international tax cooperation practices, which meet international standards applied across G20 nations and all international financial centers. These are confirmed by FATF and OECD Global Forum assessments, Cayman’s commitment to be an early adopter of the OECD common reporting standard and its participation in U.S. and U.K. FATCA initiatives. “We are confident that if these 11 EU countries transparently and objectively evaluate the Cayman Islands robust international tax cooperation regime against global standards that the Cayman Islands will be promptly removed from this non-compliant list,” Cayman Finance said.

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  1. What we refuse to accept in the Cayman Islands is that there are some entities that are hell bent on the destruction of the Cayman Islands and that those entities will stop and nothing until they have achieved their objective.

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  2. What is "fair tax competition" exactly? Aren’t taxes a means to funding a countries government services, expenses and liabilities? The Cayman Islands has a budget surplus based on its own tax model and a thriving business community. However the complaining EU, has almost all of its countries into bankruptcy with the exception of Germany. So the Cayman Islands should adopt and complete according to THEIR tax models NOT based on the Cayman Islands tax requirements, rather compete with a No-Austerity-Business-repelling tax model which has bankrupted most of the EU.

    There is a reason businesses move to Cayman, Monaco, Bermuda, Guernsey etc..

    Look at who blacklisting Cayman! Belgium, Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal and Spain

    GREECE Are you kidding me?!

    I hope our finance minister won’t force Cayman to grab its ankles to appease countries like Greece and Spain! Are you kidding me? Greece is one boot out of the EU for having created the greatest deadbeat country in history…

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  3. To Mack Boland. I don’t think anybody is out to destroy Cayman, really. What the attackers all want is for every jurisdiction in the world to levy the same high rates of tax. It bugs the life out of them that Cayman succeeds so well without an Income Tax.

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  4. Mac Boland — I think your comment reflects a level of paranoia that unfortunately is too common in Cayman, but doesn’t have any basis in reality. Do you really think that countries like Greece, Italy, Belgium, Estonia and Croatia are hell-bent on the destruction of the Cayman Islands?

    While it is unfortunate that Cayman made the list, to think that any of this is part of a larger agenda to destroy Cayman is paranoia at its finest.

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  5. Asking for "fair tax competition" is basically asking Cayman to tax their residents the same as everywhere else so Cayman doesn’t look more attractive to businesses and investors. That would be no different than saying if a bottle of beer costs 10 bucks at one bar the other bar down the street cannot sell it for 8 Bucks or a loaf of bread for 5 dollars at Kirks has to also cost 5 at Fosters. It’s business folks, don’t blame Cayman if your business model isn’t working as good as theirs.

    People discount their services all this time to get business, some even give certain services for free because it increases the need for another service, such as free cell phones with your two year agreement. If they cannot compete with Cayman they should look at their own product not point the finger at Cayman.

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  6. @Gordon Barlow:

    Thank you for the feedback. Whichever way you slice it the end result is the same.

    @Steven White:

    You are more than entitled to your opinion. However, destroying our way of life for no valid reason is the same as trying to destroy the country. Many of these countries that are against our position on taxation already tax their citizens too heavily and should ,instead of attacking countries like Cayman, be looking to reduce wasteful spending and restructure their own tax systems so that they are more competitive.

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  7. The Cayman Islands has several main forms of taxation:

    1. Import duty. Similar to the VAT or Sales Tax charged in other countries.

    2. Work permit fees. On Non-Caymanians only. This is a type of income tax except that it is a tax based on your line of work. So every foreign waiter pays the same work permit fee (or their employer does) as does every attorney. If that person is clever and hard-working they are the only ones to reap the benefit. They don’t pay an ever increasing share to the taxman.

    3. Corporation taxes. Again there is a flat fee. It does not increase based on your profits.

    It is this last fee the EU are most upset about.

    And yes, Mack is right. The EU hates anyone not charging the same rate of tax that they do. Unless it’s Eire, which can charge a lower corporation tax and it’s just fine.

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  8. We need to make sure we step up our game and are better than anyone else. Our monetary authority needs to be world class. Someone needs to champion Cayman much better than we do. At the same time, we need to make sure that we clean up our own internal "challenges" before they become front page news someplace else.

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