The Editor speaks: Was Cayman punished by the EU or was it our own fault?
Just a few weeks after the UK left the European Union they place us (a British Protectorate) on their list of non-cooperative jurisdictions regarding tax issues.
We missed passing a crucial piece of legislation before a key deadline by a matter of days.
Premier Alden McLaughlin said he was “deeply disappointed”.
So, why did it happen? Why wasn’t it passed in time?
Our premier seems to believe he had done everything he needed to co-operate with the EU to deliver on our commitments to enhance tax good governance. He said that since 2018, Cayman has adopted more than 15 legislative changes in line with the EU’s criteria, and in April 2019 the EU confirmed that Cayman had satisfied its economic substance requirements, with the exception of economic substance for funds.
However, although Cayman passed the laws required they didn’t come into force here until February 7th. This was a week after the EU deadline and after the meeting when the EU made their decisions – we did not cross the post in time.
Even though McLaughlin said he had told the EU Finance Ministers the necessary laws were passed they took no notice what he had said.
And he seems surprised.
He said, “While Cayman consulted with a number of stakeholders on our legislation, including our financial services industry, the principal components of our new and revised laws were shaped by the EU’s criteria,”
“The Cayman Islands also remains fully committed to cooperating with the EU, and will continue to constructively engage with them with the view to be de-listed as soon as possible,” he added.
“As soon as possible”. Hmmm.
German politician Markus Ferber, of the Christian Democrat EPP group, said this should serve as a warning to Britain as it tries to position itself in the global economy as a country outside the EU.
“The UK would be well advised to take note that EU Finance Ministers put a British Overseas Territory on the blacklist of tax havens. This sends a clear signal that the idea of turning the UK into a tax haven will not be acceptable to the EU,” he said. “There are reputational consequences because being blacklisted by the EU clearly is a signal about the problems in tax governance.”
That would appear we are being punished.
Mainly, though, the blame must lie with ourselves.
