The Cayman Islands government has issued a statement saying it “regrets” that the Netherlands had chosen to break from other EU member states by establishing its own “blacklist” of 21 jurisdictions, including the Cayman Islands.
On Dec. 28, the Dutch ministry of finance released a tax list of 21 jurisdictions aimed at preventing companies from avoiding tax by moving mobile assets to low-tax jurisdictions.
From 2021, a withholding tax of 20.5 percent will be levied on interest and royalty payments from the Netherlands to entities in listed jurisdictions. The list will also be applied to a number of other cases and transactions.
In a statement issued by the Premier’s Office Friday, the government said the list was based on the sole criterion of those jurisdictions having a lower corporate tax rate than any EU member state.
All of the countries on the list have a corporation tax rate of less than 9 percent, while some, like Cayman, have no corporation and income tax at all.
“This ‘blacklisting’ does not take into account Cayman’s demonstrated adherence to international standards for tax transparency, or participation with the OECD’s BEPS Inclusive Framework, and ignores our engagement with the EU’s Code of Conduct Group over the last two years to address their concerns regarding economic substance,” the statement said.
The government rejected the blacklisting as “unjustified” and “lacking in fairness and credibility.”
“It is unfortunate that the Netherlands has chosen to attempt to divert criticism of its own tax practices by attacking the legitimate tax regimes of other jurisdictions,” the statement continued.
“Putting aside this unfortunate action, the Cayman Islands continues its long-standing commitment to adhering to global standards, and to working with the global community to improve their effectiveness.”