Cayman’s government and financial services industry professionals have had mixed reactions to the territory’s recently passed economic substance legislation, with some expressing cautious optimism that the new laws will increase investment in the islands, while others are bracing for an exodus of companies.
Similar feelings have permeated other offshore jurisdictions that have also passed substance legislation in an attempt to avoid being placed on a European Union blacklist. The EU wants offshore jurisdictions to implement legislation encouraging brick and mortar institutions, rather than the “shell companies” that comprise a large portion of the jurisdictions’ financial industries.
Along with Cayman, the British Virgin Islands, Bermuda, Jersey, Guernsey, the Channel Islands, and the Isle of Man have also passed such legislation.
Seemingly, the most negative public reaction to the EU requirements has come from the BVI, with some legislators there accusing the international pressure on the jurisdiction as an attempt to return it to “economic slavery.”
With more than 400,000 companies registered in the BVI – nearly all of them having no physical presence there – the BVI likely has the most to lose.
When BVI lawmakers debated the legislation last month, they described the EU and other international players as bullies.