The Cayman Islands is not on the EU’s list of non-cooperative jurisdictions for tax purposes.

The list is the outcome of the EU’s screening process to identify countries that it considers to be non-cooperative in working with EU Member States to combat tax fraud, evasion and avoidance, which erodes the tax bases of EU Member States.

The EU announced the list of 17 non-cooperative jurisdictions today. It also announced a list of 47 countries that it considers cooperative, but that it says can make further enhancements to prevent misuse of their jurisdictions. The Cayman Islands is included among these 47 countries.

In developing its lists, the EU assessed jurisdictions against three criteria. The EU had no concern with Cayman’s position on two of these criteria: tax transparency, in relation to our exchange of tax information with other countries; and implementation of the OECD’s base erosion and profit shifting (BEPS) programme, which addresses multinational companies’ tax avoidance strategies.

For the criterion on fair taxation, the EU noted positively that Cayman’s system does not charge different tax rates to persons based on any factor, including whether the person resides in Cayman or not. As part of this particular criterion, the EU also wants to ensure that jurisdictions do not facilitate ‘letterbox companies’. These companies, which are set up to circumvent tax obligations, do not actually have physical presence, and therefore do not perform tangible economic activities, in the country in which they are established.

‘The majority of Cayman’s companies are not bricks and mortar, but they also are not letterbox companies’, explained the country’s Premier, the Hon. Alden McLaughlin. ‘Rather, they are financial instruments that pool investment capital and facilitate international transactions.

‘In addition, our transparency aids foreign tax authorities with their tax assessments.

We provide taxpayer information to more than 100 countries, including all EU Member States and G20 countries. Thus there is no interest in setting up these companies to circumvent tax obligations’.

In cooperation with the EU, the Cayman Islands Government is further assessing the fair taxation criterion, and will work with EU Council officials to address this issue by December 2018.

‘This is in line with the Cayman Islands’ longstanding commitment to international cooperation, which has been recognised by international organisations such as the OECD, the Financial Stability Board, and the International Organisation of Securities Commissions’, said the Minister of Financial Services, the Hon. Tara Rivers.

The EU began its process of developing its non-cooperative tax jurisdictions list in fall 2016, by inviting 92 jurisdictions to participate in the assessment. The Cayman Islands Government has continuously cooperated in this process by responding to multiple requests for written information, phone calls, and face-to-face dialogue.

 

Note: See below Cayman Finance PR for EU PR and list of 17 non-cooperation tax jurisdictions

 

Response from Cayman Finance to publication of EU list on non-cooperation tax jurisdictions

Cayman Islands has not been included on the EU’s list of non-cooperative tax jurisdictions.

Cayman Finance has worked hard with the Cayman Islands Government to address the concerns the European Union has raised.

We are at the forefront of regulatory and tax compliance and information exchange. The Cayman Islands meets or exceeds the highest global financial standards, sharing the same OECD rating as many EU Member States. As an early adopter of international best practice in standards for transparency and cross-border cooperation we will continue to work closely with our colleagues in tax and law enforcement authorities around the world.

We are confident that we will be able to address the areas where the EU requires some further clarification.

About Cayman Finance:

Cayman Finance’s mission is to protect, promote, develop and grow the Cayman Islands financial services industry through cooperation and engagement with domestic and international political leaders, regulators, organisations and media; to promote the integrity and transparency of the Industry by legislative and regulatory enactment and to encourage the sustainable growth of the Industry through excellence, innovation and balance.

Related story:

Fair Taxation: EU publishes list of non-cooperative tax jurisdictions

Brussels, 5 December 2017

The first ever EU list of non-cooperative tax jurisdictions has been agreed today by the Finance Ministers of EU Member States during their meeting in Brussels.

In total, ministers have listed 17 countries for failing to meet agreed tax good governance standards. In addition, 47 countries have committed to addressing deficiencies in their tax systems and to meet the required criteria, following contacts with the EU.

This unprecedented exercise should raise the level of tax good governance globally and help prevent the large-scale tax abuse exposed in recent scandals such as the “Paradise Papers”.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The adoption of the first ever EU blacklist of tax havens marks a key victory for transparency and fairness. But the process does not stop here. We must intensify the pressure on listed countries to change their ways. Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions, while those that have made commitments must follow up on them quickly and credibly. There must be no naivety: promises must be turned into actions. No one must get a free pass.”

The idea of an EU list was originally conceived by the Commission and subsequently taken forward by Member States. Compilation of the list has prompted active engagement from many of the EU’s international partners. However, work must now continue as 47 more countries should meet EU criteria by the end of 2018, or 2019 for developing countries without financial centres, to avoid being listed. The Commission also expects Member States to continue towards strong and dissuasive countermeasures for listed jurisdictions which can complement the existing EU-level defensive measures related to funding.

Next Steps

The EU listing process is a dynamic one, which will continue into 2018:

As a first step, a letter will be sent to all jurisdictions on the EU list, explaining the decision and what they can do to be de-listed.

The Commission and Member States (in the Code of Conduct Group) will continue to monitor all jurisdictions closely, to ensure that commitments are fulfilled and to determine whether any other countries should be listed in the future. A first interim progress report should be published by mid-2018. The EU list will be updated at least once a year.

The EU list of non- cooperative jurisdictions for tax purposes

1. American Samoa

American Samoa does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

2. Bahrain

Bahrain does not cover all EU Member States for the purpose of automatic exchange of

information, has not signed and ratified the OECD Multilateral Convention on Mutual

Administrative Assistance as amended, facilitates offshore structures and arrangements aimed at

attracting profits without real economic substance, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

3. Barbados

Barbados has a harmful preferential tax regime and did not clearly commit to amending or

abolishing it as requested by 31 December 2018. Barbados’ commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

4. Grenada

Grenada has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not clearly commit to addressing these issues by 31 December 2018. Grenada’s commitment to comply with criteria 1.1, 2.1 and 3 will be monitored

5. Guam

Guam does not apply any automatic exchange of financial information, has not signed and ratified,

including through the jurisdiction they are dependent on, the OECD Multilateral Convention on

Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

6. Korea (Republic of)

Korea has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

7. Macao SAR

Macao SAR has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not commit to addressing these issues by 31 December 2018.

Macao SAR’s commitment to comply with criteria 1.1 and 2.1 will be monitored.

8. Marshall Islands

Marshall Islands facilitates offshore structures and arrangements aimed at attracting profits without

real economic substance, does not apply the BEPS minimum standards and did not commit to

addressing these issues by 31 December 2018. Marshal Islands’ commitment to comply with criteria 1.1 and 1.2 will be monitored.

9. Mongolia

Mongolia is not a member of the Global Forum on Transparency and Exchange of Information

for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019.

10. Namibia

Namibia is not a Member of the Global Forum on Transparency and Exchange of Information

for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019. Furthermore, Namibia has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

11. Palau

Palau facilitates offshore structures and arrangements aimed at attracting profits without real

economic substance and refused to engage in a meaningful dialogue to ascertain its compliance of

with criterion 2.2. Palau’s commitment to comply with criteria 1.1, 1.2, 1.3 and 3 will be monitored.

12. Panama

Panama has a harmful preferential tax regime and did not clearly commit to amending or abolishing

it as requested by 31 December 2018. Panama’s commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

13. Saint Lucia

Saint Lucia has harmful preferential tax regimes, does not apply the BEPS

minimum standards and did not clearly commit to addressing these issues by 31 December 2018.

14. Samoa

Samoa has harmful preferential tax regimes, does not apply the BEPS minimum standards and did

not commit to addressing these issues by 31 December 2018.

15. Trinidad and Tobago

Trinidad and Tobago has been attributed a rating of “Non Compliant” by the Global Forum on

Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD

Multilateral Convention on Mutual Administrative Assistance in Tax Matters as amended, has a

harmful preferential tax regime and did not commit to addressing these issues by 31 December

2018. Trinidad and Tobago’s commitment to comply with criteria 1.1 and 3 will be monitored.

16. Tunisia

Tunisia has harmful preferential tax regimes and did not commit to amending or abolishing them by

31 December 2018. Tunisia’s commitment to comply with criterion 3 will be monitored.

17. United Arab Emirates

The United Arab Emirates does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018. United Arab Emirates’ commitment to comply with criteria 1.1 and 1.3 will be monitored.

Further information can be found at: http://www.consilium.europa.eu/media/31945/st15429en17.pdf

SOURCE: http://europa.eu/rapid/press-release_IP-17-5121_en.htm