Cayman Islands sign tax information exchange agreement
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| Published on Wednesday, April 1, 2009 |
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By Tad Stoner
Cayman Net News
Email: tad@caymannetnews.com
GEORGE TOWN, Cayman Islands: The Cayman Islands Government on Wednesday signed a five-nation, seven-territory information exchange agreement in Sweden, two days after a letter from the territory’s Leader of Government Business, Kurt Tibbetts, was delivered to US President Barack Obama.
The pact, with Norway, Sweden, Finland, Iceland, Denmark and Danish territories Greenland and the Faroe Islands, complements the original 2001 US accord, bringing to eight the Cayman Islands’ bilateral tax-information agreements.
Tibbetts’ letter to the US leader was intended to assure Washington of Cayman’s commitment to a continued sharing of tax information with jurisdictions the world over, and the deals that were inked on Wednesday served as further examples of this intention.
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| Minister responsible for international financial affairs, Alden McLaughlin |
Signed by Minister responsible for international financial affairs, Alden McLaughlin, and Deputy Financial Secretary Deborah Drummond, the agreement means the seven jurisdictions can seek from Cayman tax information on civil or criminal tax matters. McLaughlin said additional commercial agreements were due in June.
“With this signing, it means we have these eight and then we would have the other 12 under the Tax Information Authority, and that brings to 20 the number of tax-information exchange agreements,” the Cayman Islands can display, McLaughlin told Cayman Net News, referring to the Cayman Islands’ alternative “unilateral mechanism” agreements.
The unilateral mechanism is part of Cayman’s 2008 Tax Information Authority Law, by which local authorities gain assent of nominated countries to exchange tax information without requiring formal government negotiations.
On 19 March, the Cayman Islands extended its “unilateral mechanism” to Germany, Austria, Belgium, the Czech Republic, Luxembourg, Slovakia and Switzerland. On 24 March, government reached out to the UK, and on Friday, 27 March, Cabinet approved inclusion of Japan, South Africa, Holland and Ireland.
McLaughlin said the 30-member, Paris-based Organisation of Economically Developing Counties (OECD) required exchange agreements with a dozen countries for jurisdictions to remain in good standing.
“The OECD previously said it wanted evidence of cooperation in relation to tax-information exchange agreements with at least 12 [OECD] countries,” he said.
He explained that this signing means Cayman exceeded the required number of countries.
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| Alden McLaughlin (L), Cayman Islands Minister for International Financial Services Policy and Ingmar Hansson, Secretary of State from Sweden signing the tax information exchange agreements in Stockholm on Wednesday |
“The G-20,” McLaughlin said, “is highly politically charged, and we all have our political positions on jobs, growth and stability,” the chief focus of the summit.
He was unsure if Cayman’s recent flurry of tax information agreement signings would mollify OECD and G-20 governments sufficiently to keep the Cayman Islands off a potential international blacklist of non-transparent and non-cooperative jurisdictions.
“Since 1998, when the Cayman Islands first committed to endorse OECD standards in relation to the operations of financial-services centres, we have developed a robust anti-money laundering and counter-terrorism financing regime and international cooperation in relation to tax-information exchanges,” the minister said.
The Cayman Islands had gained high marks from “all the relevant agencies over the years,” McLaughlin said, “and the International Monetary Fund [after a 2-13 March inspection tour of Cayman] is likely to report a solid information exchange. We have been discussing this for years with the OECD and there is no question we have met with compliance.
“One just never knows what they are going to do. The issue is transparency and Gordon Brown wants no safe places where people can go to hide money to avoid taxes. That’s not part of the Cayman Islands business, and we have no problem supplying information on tax matters. It’s not about whether we have met technical standards, though. It depends on the climate in the room on that particular day.”
The Washington letter follows a similar letter to British Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling. The document, Tibbetts said, seeks to “reinforce Cayman’s position directly, in view of both the UK’s role as host of the G-20 summit and our metropolitan power.”
This plea for fair treatment ahead of the 2 April London summit arrives in Washington on the heels of a 4-6 March lobbying tour by a five-member Cayman delegation hoping to persuade policymakers – in a series 30 meetings – of the Cayman Islands’ compliance with international standards of financial regulation.
The 30 March three-page letter to Mr Obama outlines Cayman’s long cooperation with US tax authorities, beginning with the 1986 Mutual Legal Assistance Treaty, through the 2001 tax-information exchange agreement, and an array of international assessments culminating in Wednesday’s Stockholm signing with five Nordic countries.
In the charged political atmosphere of a declining global economy and public pressure for relief ahead of 2 April, Brown has already named the Cayman Islands and called for a crackdown on offshore financial centres: “I believe that for the first time we can also agree the big changes necessary for coordinated action that will signal the beginning of the end of offshore tax havens and offshore centres,” the British prime minister said. | | | | Reads : 1171 | | | |
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