Financial Services Minister Tara Rivers has returned from her meeting with officials in Brussels about Cayman’s inclusion on the European Union’s list of non-cooperative tax jurisdictions, but government has provided little detail about what was discussed at the meeting or what Cayman may have to do by the end of the year to avoid being blacklisted by the EU.
The meeting stems from an EU decision last December to include Cayman on a “gray list” of jurisdictions that have made unfulfilled promises to meet EU standards on tax policy. To avoid being blacklisted this December and to get off the gray list, Cayman has to demonstrate that companies based in the jurisdiction have real economic activity, like staffed offices or the presence of key decision-makers.
On Wednesday, government released a statement about Ms. Rivers meeting EU officials last month to discuss these issues.
“All meetings took place in a very constructive atmosphere. The visit, together with earlier visits this year and in 2017, has helped to underscore Cayman’s commitment to ongoing cooperation with the EU on matters that are of mutual interest and benefit,” Ms. Rivers said in government’s release. “Hopefully, this ongoing dialogue with the EU officials and Member State representatives also promotes an increased understanding that our financial system is not designed to facilitate harmful tax practices.”
Government’s announcement also listed the EU officials who spoke with Ms. Rivers and her team, which also included Department of Financial Services Policy and Legislation Director Michelle Bahadur and the department’s special projects coordinator, Anna Goubault.
However, the announcement did not provide specifics on what the EU wants Cayman to do in order to avoid being blacklisted.
The announcement also said that Ms. Rivers met with caucus members on Monday and financial services industry officials on Tuesday.
A financial services industry professional at that meeting said few specifics were discussed about which Cayman companies are within the scope of what the EU finds acceptable, and which companies are not. The professional, who requested not to be named for this story, said that a paper will be presented to Cabinet within the next few weeks on the matter, but that the contents of the paper were not discussed.
The Crown Dependencies of Jersey, Guernsey and the Isle of Man face similar accusations as Cayman. Those jurisdictions consulted local businesses in August on their views on proposed new legislation that will require certain tax-resident companies to demonstrate they have sufficient substance.
The legislative proposals vary depending on the industry, but suggest that key management decisions must be taken locally through a physical presence.
Ms. Rivers noted in September that the ministry will launch a similar public consultation within the next few months, after draft legislation has been prepared.