As the Joint Ministerial Council meeting continues in London this week Financial Services Minister Hon Wayne Panton says he intends to meet with European States in a bid to have Cayman removed from their lists of third-country, Non-cooperative Tax Jurisdictions.
The minister, speaking at the last sitting of the Legislative Assembly for 2015 last Thursday (26 November), said the inclusion of Cayman on such lists as a non-cooperative jurisdiction for transparency and information purposes is “inaccurate and unfair” since this country has robust mechanisms in place to address those issues.
We should rightly have every expectation that we will be removed from this latest list. I only hope that historical experiences of shifting goal posts are not brought back into focus yet again. We will not accept that and we will continue to demand recognition for the efforts of the Cayman Islands to protect our good reputation as a cooperative jurisdiction,” he contended.
Cayman, he said, recognises its international obligations , engages and participates at the highest levels to ensure the stability of the global financial system.
Mr Panton, in his statement to the House on the issue, said that Cayman is being placed in a situation that is difficult to change as this country has opted for a consumption-based tax framework, rather than a direct-tax regime.
“Consumption-based models are recognised as viable, stable regimes by many economists, and indeed the US operated on a consumption tax until its needs to fund World War I forced it to adopt the coercive, direct-tax approach,” he explained.
He said it is “absolutely prejudicial and wrong” that Cayman is included on the list of non-cooperative jurisdictions when the mechanism used for evaluation in the compilation of that list is based on direct-tax system rather than consumption-based.
Mr Panton said that he sent letters to EU states registering Cayman’s concern about the publication of the EC list in its Comprehensive Action Plan for Fair and Efficient Corporate Taxation in the EU in which Cayman appeared in 11th place.
The minister said he informed the EU states that the list was a “regressive step in global efforts to improve international tax cooperation, in that it threatened to undermine G20 and Organisation for Economic Co-operation and Development (OECD) objectives.”
He lamented that it “depreciated” the important work accomplished through the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes.
The minister indicated that on 29 June a joint letter signed by Cayman, Anguilla, British Virgin Islands (BVI,) Montserrat and Turks and Caicos Islands (TCI) was sent to European Commissioner Pierre Moscovici expressing concerns about the list.
Mr Panton said he also sent letters to all the EU member states that listed Cayman on their national lists reiterating the steps Cayman has taken on tax transparency and seeking expeditious removal of this country from those lists.
He said following advocacy efforts only eight of the 11 member states have kept Cayman on their lists.
The minister tabled his letter to the Mr Moscovici and The European Commissioner’s letter in reply in the LA.
He said that he was hopeful that with the Foreign Commonwealth Office (FCO)’s support he will finally execute a tax information exchange agreement with Spain.
“Although we completed negotiations with Spain some years ago, the signing of the Tax Information Exchange Agreement (TIEA) was delayed because of bilateral issues between UK and Spain, which now have been resolved. Upon entry into force of the TIEA, Cayman will be removed from Spain’s list further reducing our appearance of EU member states’ list to seven,” Mr Panton said.