The bullies in that faraway socialist blot, aka Brussels, are eyeing the Cayman Islands’ milk money again.
Our perceived offense, this time, is not “behavioral” – i.e. being too secretive or granting special tax deals; no, our “sin” is that Cayman doesn’t have a local corporate income tax. If this were a usurpation of land, rather than finance, Brussels would be censored and condemned for invading a foreign territory.
We’ll briefly highlight the relevant content of the European Commission’s new “pre-assessment scorecard,” which is a preliminary step in what may become yet another financial blacklist. (For more details, read the front page story published in Friday’s Cayman Compass.) Cayman’s so-called scorecard reads as follows:
- Home to a great amount of financial activity (“Strike One”);
- Strong economic ties to the EU (“Strike Two”); and,
- Certain “risk indicators,” such as a lack of corporate income tax (“Strike Three”).
Think about that for a moment. If Cayman does end up on an EU blacklist based on the factors in the scorecard, that means all our efforts over the decades by our officials and industry to comply with international regulations, global standards, endless photo ops signing tax information exchange agreements, beneficial ownership databases, etc., will have amounted to almost naught as far as Europe is concerned.
Increasingly it appears the only way European officials will ever be satisfied with Cayman’s role in the international financial services arena is if Cayman has no role.
Cayman is not the only “third country jurisdiction” to be swept up in Europe’s expansive dragnet. Other financial centers flagged for one or more “risk indicators” on the scorecard include: the Bahamas, Bermuda, British Virgin Islands, Hong Kong, Guernsey, Isle of Man, Jersey, Singapore … and the United States … and China. (In other words, just about all of them.)
Perhaps it is time for the “empire” to strike back.
Cayman’s posture on these bullying tactics, to our mind, has been far too passive – all compliance, little defiance.
Following the rule for government assessments in general, Europe has exempted its own entities from inspection during the exercise. EU countries such as Ireland, Luxembourg and the Netherlands – whose governments have come under recent fire for enabling “aggressive” tax structures (which European officials, in Orwellian fashion, have dubbed “anti-competitive”) – are subject to a different set of standards, and consequences, than everybody else.
European officials say the scorecard is “an objective and robust data source,” and “does not represent any judgement of third country jurisdictions, nor is it a preliminary EU list ….”
Does anyone believe that? What we are witnessing is “Big Brother” Brussels blithely and routinely trying to impose its version of economic redistribution and social justice on its member countries. Was anyone, other than the metastasizing legion of Brussels bureaucrats and regulators, surprised when the United Kingdom finally said, “Enough; no more; no thanks; adios?”
For us in Cayman, the key questions about the new tax scorecard are:
- What is Europe going to do with it?
- What, if anything, are we – our officials and our industry representatives – going to do about it?