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.