Cayman-Domiciled Collective Investment Vehicles, Multinational Enterprises Benefit EU & Other Countries

GEORGE TOWN, Cayman Islands – Cayman Finance today is releasing “Cayman: Engine of Growth and Good Governance,” a new report that documents how the jurisdiction’s unique combination of tax neutrality, high-quality legal and regulatory system, and professional expertise attract Collective Investment Vehicles (CIVs) and Multinational Enterprises (MNEs), providing economic benefits to other jurisdictions without posing tax harm.

Trade and investment are engines of innovation and growth. Underpinning both are effective institutions: good governance (especially, political stability and the rule of law), a high-quality legal system that protects owners of assets, and effective and adaptive legislation and regulation. This new report has been commissioned by Cayman Finance to help clarify how the Cayman Islands has successfully combined all of these attributes with others that make it unique to international investors, to help drive the international economy and facilitate global economic growth.

“This report documents how the Cayman Islands’ pure tax neutrality and commitment to good governance enable investors to pool capital securely and transparently and pursue investment opportunities that drive economic growth, create jobs and generate tax revenue in countries around the world,” said Jude Scott, the CEO of Cayman Finance. “As this research shows, Cayman also poses no tax harm to other jurisdictions due to its tax neutral regime and early adoption of tax information exchange agreements, Common Reporting Standards (CRS), and other elements of the OECD’s Base Erosion and Profit Shifting (BEPS) project.”

Cayman’s approach has a competitive advantage. While some jurisdictions offer some similar attributes, a key reason that both collective investment vehicles (CIVs) and multinational enterprises (MNEs) choose to domicile entities in Cayman rather than elsewhere is that Cayman offers true tax neutrality at minimal cost. By contrast, many other jurisdictions are at best able only to facilitate a facsimile of tax neutrality through the use of special structures and double taxation treaties; moreover, these special structures are highly limiting and come with additional costs.

“Cayman: Engine of Growth and Good Governance” combines a detailed review of scholarly research and publications from the EU, OECD, IMF, FATF, UNCTAD, and other national and international bodies. Key findings include:

• CIVs and MNEs choose to domicile entities in Cayman rather than in other jurisdictions because Cayman offers pure tax neutrality at minimal cost in a well-regulated legal environment.

• Cayman and other tax neutral financial centres benefit developed jurisdictions like the EU as well as less developed countries by facilitating the provision of trillions of dollars of funding to infrastructure and other projects, increasing economic activity and innovation.

• Cayman’s pure tax neutrality enables entities to avoid double and triple taxation, facilitating greater levels of economic activity in the EU and elsewhere than would otherwise be the case. Due to Cayman’s commitment to information sharing, this activity is transparently reported to tax authorities in EU member states and other jurisdictions and leads to increased government revenue through a wide range of taxes.

“Tax neutrality is not tax avoidance. A tax neutral jurisdiction does not add an extra layer of tax on top of what investors and companies owe in their own jurisdictions in compliance with their domestic tax rules.  This report demonstrates that as part of the international financial system Cayman is a transparent and globally responsible partner that improves access to capital in the US, UK, EU and other developed and developing countries,” said Mr Scott. “Moreover, it shows that International standards-setting and policy-making efforts should recognise and support the beneficial contributions to economic growth CIVs and MNEs domiciled in Cayman make globally.”

A “Cayman: Engine of Growth and Good Governance” was authored by leading economist Julian Morris and is available, along with other Cayman Finance reports, at www.caymanfinance.ky.

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About Cayman Finance:

Cayman Finance is the association of the financial services industry of the Cayman Islands, a premier global tax neutral financial hub efficiently connecting law abiding users and providers of investment capital and financing around the world. Cayman Finance represents first rate service providers within investment funds and asset management, banking, insurance, reinsurance, capital markets, and trusts sectors and world class fiduciary, legal, and public accounting service providers. Additionally, Cayman Finance represents 15 industry associations. Learn more at: www.caymanfinance.ky

About Jude Scott:

Jude Scott is a respected and recognised expert on global financial services and has served as CEO of Cayman Finance since 2014. He retired as an Audit Partner in 2008 after spending over 23 years with Ernst & Young and previously served as the Global CEO of Maples and Calder. Jude attained extensive experience within the Cayman Islands’ financial services industry, having served on various government and private sector committees, including: the Cayman Islands Financial Services Council; the Cayman Islands Society of Professional Accountants; the Education Council; the Insolvency Rules Committee; and the Stock Exchange.

About Julian Morris:

Julian Morris is an economist with over 25 years’ experience in think tanks and academia. A Senior Fellow at Reason Foundation, Senior Scholar at the International Center for Law and Economics, and Fellow of the Royal Society of Arts, he is the author of dozens of scholarly articles and the editor of several books. Julian’s work focuses on the role of political and legal institutions as they relate to entrepreneurship, innovation, and sustainable development. A graduate of Edinburgh University, Julian has Masters degrees from University College London and Cambridge University, and a law degree from the University of Westminster.