Government: European Commissioner recognizes Cayman’s tax transparency regime

European Commissioner Pierre Moscovici at a meeting with Cayman Islands Financial Services Minister Wayne Panton in Brussels last week said he recognized the strength of Cayman’s tax transparency regime and its participation in the OECD’s base erosion and profit shifting inclusive framework, according to a press release from the Cayman Islands Government.

“This recognition demonstrates the effectiveness of the hard work of my ministry,” Minister Panton said in the release. “We are obviously pleased by the supportive comments made by Mr. Moscovici, and indeed other members of his commission, including Mr. Valere Moutarlier, who is the director general of the EC’s Taxation and Customs Union.”

On Feb. 1, the EU sent letters to 92 countries, including the Cayman Islands, informing them that they will be screened as part of an exercise that will establish a blacklist of countries deemed uncooperative in tax matters.

The letters invite the jurisdictions to engage in discussions with a panel of experts from EU member states, who will screen jurisdictions against several criteria related to tax good governance.

The letters stated that inclusion in the screening process does not mean a country will end up on the blacklist. “It should be emphasized that the selection of jurisdictions for the 2017 screening process was based on a set of objective indicators (such as strength of economic ties with the EU, financial activity and stability factors) and that this selection does not prejudge the outcome of this process,” the letter said.

The screening process was also the subject of Minister Panton’s Feb. 2 meeting with the European Commissioner for Economic and Financial Affairs, Taxation and Customs.

“Mr. Moscovici assured us that it would be a fair screening process,” Mr. Panton said. “He was clear that no jurisdiction is being prejudged to be included on a list of non-cooperative jurisdictions that is intended to be created by the end of this year.

“This was an excellent opportunity to raise awareness and understanding of Cayman’s tax system, and to assure members of the [European Community] that our indirect tax system is not designed to negatively impact other jurisdictions,” he added.

Cayman’s dialogue with the EU in the screening process will be complicated by the lack of a definitive agreement between EU members on the criteria that will determine whether a country will be blacklisted.

At a meeting in November 2016, EU finance ministers agreed that to avoid being on the future blacklist, third countries would have to comply with international transparency standards, avoid preferential tax measures, and implement a global plan against tax avoidance drawn up by the OECD.

All this should not be an issue for the Cayman Islands but the EU blacklist criteria also states that “a jurisdiction should not facilitate offshore structures or arrangements aimed at attracting profits that do not reflect real economic activity in that jurisdiction.”

The EU Code of Conduct Group on Business Taxation has yet to define what this means.

0
0

NO COMMENTS

LEAVE A REPLY