Rivers talks tax policy with lawmakers in Brussels

Minister for Financial Services Tara Rivers defended Cayman’s tax system in Brussels, Belgium, on Wednesday.

She first debated tax fairness in Europe in a seminar hosted by the Centre for European Policy Studies think tank, where she joined the Organisation for Economic Co-operation and Development’s head of tax policy Pascal Saint-Amans, and Jeppe Kofod, a member of the European Parliament.

On the same day, the minister participated in a roundtable discussion on EU tax policy and tax competitiveness at the European Business Summit.

The Cayman Islands government’s participation in the events in Europe is aimed at trying to influence political decision-makers in their determination of Cayman’s tax system.

The EU has included Cayman on a gray list of countries that have committed to changing parts of their tax system to avoid being deemed uncooperative in tax matters by the EU.

The EU has pointed to a lack of economic substance of Cayman-based entities as an area that the Cayman Islands will need to change before the end of the year to avoid blacklisting and potential punitive measures by EU member countries.

Speaking in Brussels, Minister Rivers highlighted the absence of a universal definition of what economic substance means.

“As evidenced by the variation of substance requirements that exists here among the EU Member States, it is important to note that there is no globally accepted definition of sufficient economic substance,” she said.

“We therefore hope that the attempt to develop standards related to sufficient economic substance is truly global; common standards would be desirable. Of course, for these standards to be globally acceptable and applicable, they must take into account different business types and tax systems that exist.”

In outlining Cayman’s tax system, Ms. Rivers noted that, “Contrary to what some may wish to believe, Cayman’s system is not designed for tax structuring purposes because there are no legal mechanisms, such as double tax treaties, free trade zones, or other preferential tax regimes, to encourage shifting of profits or the erosion of the EU tax base.”

She added that there are no shell companies, no bearer shares and no numbered accounts.

“And given the high level of tax transparency which has existed for many years now, the notion that somehow Cayman is a place to hide money is incorrect,” she said.

Ms. Rivers further explained that Cayman’s primary function in the global financial services ecosystem is to provide the ability for investment flows to be efficiently and effectively deployed around the world.

“In addition, Cayman’s adherence and ongoing support of international standards allows international competent authorities – including those relevant authorities in each EU Member State – to have access to the information they need from Cayman to determine and protect their own bases.”

Other speakers in the roundtable included Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs; Alain Lamassoure, member of the European Parliament; the OECD’s Pascal Saint-Amans; Jeffrey Franks, director, IMF Europe; and business representatives.

The European Business Summit is an annual summit of political decision-makers, business leaders, members of academia and civil society, and the roundtable attracted about 200 participants.

Later that evening, Ms. Rivers also attended the inaugural EBS Business Leaders’ Dinner and Awards ceremony at the Egmont Palace in Brussels, where she dined with the Belgian Ambassador to Denmark, Leo Peeters, the organizer of the summit.

Ms. Rivers will continue to engage with EU policymakers in Brussels during the week.

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  1. I just heard from a Caymanian friend of mine who has a second home in Spain. He arrived there to discover his local bank account had been closed despite being operated in A1 fashion for many years.

    Why? Because he had wired money to it from his account in Cayman and Spanish banks refuse apparently to have accounts with anyone who lives in the Cayman Islands or who sends money from the Cayman Islands.

    I have no idea if this is true for other EU countries but suspect it is.

    We need to fight back against the public “Hollywood” perception that we are a nation of drug runners and hiders of money from corruption.
    (The number 1 and 2 places for that of course being London and New York.)

    How to fight back? Tell the international press the facts about how hard it is to open bank accounts and corporations here. Challenge them to come over here and try to open an account.