Cayman among jurisdictions on EU ‘grey-list’

| 05/12/2017 | 51 Comments
Cayman News Service

Premier Alden McLaughlin and Financial Services Minister Tara Rivers

(CNS): The Cayman Islands has dodged the European Union Council’s black-list of 17 uncooperative nations after the much-anticipated tax list was published Tuesday. However, this jurisdiction and more than 40 other countries are on a ‘grey-list’ of countries that have agreed to take steps toward “abolishing harmful tax practices”. Cayman, Bermuda, Guernsey, Isle of Man, Jersey and Vanuatu are listed as “tax regimes that facilitate offshore structures which attract profits without real economic activity”.

But according to the memo documenting the EU’s announcement of the black-listed countries, Cayman and those other five jurisdictions “are committed to addressing the concerns relating to economic substance by 2018”.

While it is not clear what that means for Cayman over the next year, it is an indication that, despite the government’s recent charm offensive, the formation of companies by global corporations in offshore jurisdictions to reduce the tax paid in the country where the company is registered is still a major stumbling block for the EU.

Toomas Tõniste, the finance minister of Estonia, which currently holds the EU Council presidency, said in a press release about the lists that the initiative was already working, as countries have made commitments to meet the criteria not to be listed.

“But it is also important that we closely monitor the implementation of commitments made by our partners around the world,” he said. “This is not just a one-off process. We will regularly review and update the list in the years to come. Our aim is to ensure that good tax governance becomes the new norm.”

Responding to the publication of the list, Premier Alden McLaughlin, who recently said in the Legislative Assembly that if Cayman was blacklisted it could be a line in the sand after years of international cooperation, maintained that Cayman is not a jurisdiction where companies are no more than a letterbox.

‘The majority of Cayman’s companies are not bricks and mortar, but they also are not letterbox companies,” said Alden McLaughlin, who was clearly relieved Cayman was not black-listed. “Rather, they are financial instruments that pool investment capital and facilitate international transactions.”

He continued, “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.”

Officials said Cayman would continue to work with the EU Council. Financial Services Minister Tara Rivers added that this was in line with Cayman’s longstanding recognised commitment to international cooperation.

But according to the memo, having been grey-listed, Cayman is now obligated to address the absence of activity of the companies incorporated here, even if they are not letter box companies. An offshore expert told CNS this is still something government will be hard pushed to deliver. It also raises the question of what the Cayman Islands can really do to address this fundamental issue.

The 17 countries black-listed are: American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and United Arab Emirates.

The grey list is more eclectic and countries are grouped into different areas of concern. Curaçao, Hong Kong SAR, New Caledonia, Oman, Qatar and Taiwan are named on the grey-list as they are still working on the implementation of automatic exchange.

Albania, Armenia, Bosnia and Herzegovina, Cabo Verde, Fiji, Former Yugoslav Republic of Macedonia, Jordan, Maldives, Montenegro, Morocco, Serbia and Swaziland are listed because they won’t be members of the Inclusive Framework or implement BEPS minimum standards by 2019.

See the EU Council report and the Cayman government’s full response in the CNS Library.

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Category: Europe, Politics, World News

Comments (51)

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  1. Anonymous says:

    We need to help educate people about the benefit of tax competition. If it wasn’t for places like Cayman offering a low tax alternative for business the onshore countries would be charging even more. But there seems to have been a concerted effort to make this a moral, rather than a legal issue. People are protesting outside Apple because it uses a completely legal structure to lower its tax bill…they don’t realise they are doing the government’s work for them.

    • Anonymous says:

      Hardly anyone realises who really pays corporation tax… their pension funds! Ultimately only people pay tax.

    • Unison says:

      It will always be a moral issue because taxation is legalized theft. We are talking about appropriating monies and business secrets against a person’s will.

  2. SKEPTICAL says:

    The premier must immediately report the precise details of what Cayman has been told it must do to be removed from the Grey List – followed in very short order, by what steps are to be taken to enable us to comply with those demands. This is not something which can be kept under wraps like the “Ritchie Report”.

  3. Jack Irvine says:

    Know your enemy

    Pierre Moscovici, is the French politician leading the charge against the offshore world. He was previously a member of the Trotskyist group, the Revolutionary Communist League, before joining the French Socialist Party in 1984.

    Cayman has not escaped. You have simply had a stay of execution. The grey list will become a black list unless you bend the knee to an unrealistic and fatal degree.

    When will the offshore world wake up to the fact that the EU attacks you repeatedly because this undermines the global financial giant we know as The City of London? The City’s power and influence infuriates the French and Germans. They will do anything through their EU puppets to damage this great institution.

    It also comes as no surprise that the EU chose this week to issue this blacklist. The UK’s Brexit negotiations are at a critical stage and this attack on The City and its offshore friends is typical of the EU’s chicanery, double dealing and hatred of the British.

    • elephant man says:

      they will keep moving the goal post until they achieve their one goal and that is to shut down our financial industry. at some point we have got to stop playing their game.

  4. Unison says:

    What is hypocritical is how the same leaders of these countries under the bloc, have imposed high taxes on their own people – that wealthy entities have no choice but to bank in Offshore Financial Centers like our Cayman Islands. These power-grabbers are into fully socializing and controlling Europe.

    In no way, should the Cayman Islands comply with them to advance their leftist agenda. Yes, we should assure them of our commitment to fight money laundering, terrorism and drugs. But for us to be austere, unethical, and inhospitable to our global clients; to forget our banking integrity for vultures that prey on their own people, I am sure our MLAs, our Premier, have alot of support and moral footing to severe ties with them. We don’t need to be on any man-made list to be accepted and carry our name.

    Peace ☺

  5. Anonymous says:

    White list, grey list, and black list ya say? Okay.

    Until the world is rid of “white-list”, western fiat currency, with the USD being the greatest and most corrupt offender, there will never be a fair and balanced global society.
    Neo-colonialism will flourish, crimes against humanity will be justified, aggrieved nations will seek revenge aka “terrorism”, and western society will remain largely ignorant of the forces at play behind the fuzzy facade of their television screens.

    Saddam challenged the legitimacy thereof and was swiftly labelled an “evil dictator possessing weapons of mass destruction” – after decades of western partnership – and promptly removed. (The justifying excuse of him gassing opposing ethnic groups 20 YEARS PRIOR was a pathetic smokescreen.)

    Gaddafi posed a challenge as well and also initiated moves to create a new currency based on actual and tangible resources (Libya being one of, if not, the most resource-rich countries in the world) … and again, was swiftly labelled an “evil dictator”, promptly assassinated and removed. Never mind that he was good buddies with BOTH Tony Blair and Sarkozy for years leading right up to the corrupt and fraudulent actions of the West. (Enter severe regional instability, mass migration, the EU refugee crisis, hysteria, xenophobia and, of course, Brexit … but I digress.)

    (For the aforementioned countries to continue to trade their precious and valuable resources for western-manipulated USD, GBP, and EUR would have been absolute madness. As for the “evil” of the 2 leaders – neither amassed even a fraction of innocent blood as have Blair and Bush.)

    Basically, engaging in the specifics and complexities of the accepted global financial system is an exercise in futility. Simply because the entire system is corrupt beyond imagination and rigged to ensure certain countries, regions and groups of people remain privileged and others are guaranteed a reality of perpetual suffering … despite geographic ownership of the overwhelming majority of resources.

    The simple reality is; rich, western countries are not actually rich. The “world’s richest men” are not actually rich. Let the feeble man-made monetary system collapse this evening along with all the baseless fiat currencies and see where we’re at in 90 days.

    There is a reason why our western countries insist and invest so much of our “money” into the military and “defence” – it is because those at the top of this facade are fully aware of the house-of-cards reality upon which we are perched.

    Anyway..ignorance is bliss so – as you were.

    Tell us more about this all-important country/colour listing situation …

  6. Anonymous says:

    Opportunity? If we are only guilty of not having enough actual activity, why not enourage more actual activity – administrative headquarters, marketing, management of R&D etc – jobs for expats AND Caymanians

  7. Richard Wadd says:

    So where did the good old USA fall on the ‘Black list’? … or to be more specific, Delaware, Navada & the rest? How about New York, home to Wall St … the single largest global center for money laundering? … The silence is just deafening.

    • Anonymous says:

      Where are Cyprus, Luxembourg, Malta, Netherlands and Ireland? Oh right…

    • Anonymous says:

      We are too big for them to take on. You might also think about trying to remain on friendly terms with us as your EU business dries up.

      • Anonymous says:

        Cayman serves as a conduit of global investment into the US and the cleanest way for US investors and companies to invest and expand globally. Cayman is now a small but integral part of the US economy. Even the US Treasury structured parts of TARP through Cayman. I’d say we’re on pretty good terms. The EU blacklist is political not economic; the commission is littered with ‘ex’-communists ideologically opposed to capitalism and tax competition. I dare say there are fewer communists in the US State/Treasury so we get along much better!

  8. Bertie :B says:

    Exactly 12:08 and don’t forget Wyoming and Nebraska now , every pink sheet listed scam on the Nasdaq have their companies formed out of these good old American states , maybe not all of them , but many are ,and the lawyers and brokers that sell these shells ,know damn well that none of them will ever make you money , they are all legal scams .Yes I know that’s an oxy moron .

    • Anonymous says:

      And when was the last time Cayman prosecuted anyone for stock fraud or money laundering? (atm and credit card thieves dont count.)

  9. Anonymous says:

    It defies rationality how any IFC can be blamed for authoring G20 tax codes that permit a redomicile of foreign-accrued after tax profits; or be blamed for the actions of isolated bad corporate actors resident in G20 countries. If there is any global criminality at play, bring it to CIMA through the well-travelled existing channels and prosecute offenders with the evidence readily supplied! In the meantime, have a critical introspective look at your 90,000 pages of infallible tax code.

  10. Revelations 3:45 says:

    Cayman was always going to make some list given the international pressures that we continue to face year after year.

    Congratulations on not making the blacklist but competitors like Ireland and Luxembourg didn’t make it either so the list seems arbitrary in nature.

    There are two key questions that need to be addressed by CIG:

    1. Will Premier McLaughlin and Minister Rivers publicly confirm what commitments (if any) were agreed to by the Cayman Islands Government representatives by the end of 2018?

    2. What is meant by the key reference to “concerns relating to economic substance by 2018”?

    That will help the public measure the success of negotiations and lobbying efforts of what being on the “grey list” means for the future of financial services in Cayman.

    Located on page 16/38

    “2.2 Existence of tax regimes that facilitate offshore structures which attract profits without real economic activity. The following jurisdictions are committed to addressing the concerns relating to economic substance by 2018: Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey and Vanuatu “

    • Unison says:

      At this point, it is left to them. We elected them to represent the interest of the Cayman Islands.

      The new pressures or demands placed on us – just what is the spelt out preferential allowance we have to make for this unelected socialist body over the state of our financial industry??? ?

      Sooner or later the repercussions of “making deals with the devil” will effect our local economy. You refer to the Apocalypse 3:45. I see a principle in the words of Jesus. Our Premier should take heed, “what shall it profit a man if he should gain the whole [in this case the EU] yet lose his own soul”

      Perhaps, this is Premier McLaughlin and Ministers Rivers greatest test. Do we follow them to ultimate ruin or do we sustain the same conservative principles our forefathers sustained, and used for the building of our financial center? ?

  11. Anonymous says:

    So according to the lists it appears the U.S. and China are just fine…obviously a list of convenience…cowards

  12. Caymanian1 says:

    Premier Alden McLaughlin, HOW MANY LINES IN THE SAND after years of international cooperation, are you going to make?!

    Even a white list from this foreign body that’s across the Atlantic, is a slap in our face!

    Who are they to “grade us” on how we do business?!

  13. V says:

    There you have it folks. The EU shows it hand. No Structures allowed. It really shows who is running the EU. A neo-Marxist/Leninist group. Socialism is truly disgusting and they believe that your money and wealth is not really yours. It is meant to redistributed to others.

    • Anonymous says:

      Not sure that’s what the point of this was M8 might want to do a bit of reading

      • Anonymous says:

        M8, it always about what 1.11 says. They are all Socialist youth league and commie sympathizers.

  14. EU the failing globalist machine says:

    Yet the Republic of Ireland is not . Laughable and corrupt in its most bias and purest form .

  15. West bay Premier says:

    I wonder how they managed to be moved from the black list to the grey list . Means that they didn’t tell the EU to learn to love us or leave us alone , then Cayman would be on the white list . Those kind of Organizations like the EU you have to stand up to them .

  16. Anonymous says:

    Neo-colonialist, racist EU aggression.

  17. Anonymous says:

    Here is an idea, let’s do nothing and wait for Hong Kong to comply with all of the EU nonsense. Mark my words, the EU will NEVER white list Cayman as it has a fundamental problem with our place in the world. Enough is enough.

  18. John Connor ?? says:

    Cayman’s survival against these bullies is the most important foreign policy issue facing Premier at this time.The hypocrisy of the EU is best described as shocking and laughable.


  19. Anonymous says:

    The underlying basis of the EU and UK approach is to punish the former colonies and territories of Europe. It was not enough to rape them while they had direct ownership.

    • Anonymous says:

      The EU maybe…not the UK…UK now needs us more than ever

      • Anonymous says:

        Err, Cayman wasn’t colonised, it was founded and settled by the British and has remained a British territory ever since.
        It was the UK that set up these islands as a financial centre in the first place, so it has no interest in seeing its destruction, on the contrary.
        Now perhaps those who deny Brexit and subscribe to the Remoaner camp realise what a pernicious virus the EU had become.

        • Unison says:

          Unless the UK Parliament becomes a full socialist body like the EU. Then to me, Brexit will mean nothing. For one day the EU is our enemy – the next day our own ?

        • Anonymous says:

          Please tell me when the UK introduced the stupid natives to the ideas that created this economy. Show me where Jacob Rees-Mogg’s ancestor explained to us 60 years ago that money is good to have and you can get it by telling other people to let you hold theirs. Then when you are finished with that, show me which ring to kiss in gratitude. And go be an ass somewhere else.

    • Anonymous says:


  20. Anonymous says:

    And where are the real criminals on this list? Not one mention of Delaware, Nevada in the good old US of A where you can have secretly owned companies and pay no tax no matter where you are from…if that doesn’t show this is all EU political posturing rather than concrete action , I have no idea what does

    • Anonymous says:

      dont let that blind you. We are under the UK and are allowed to operate the way we do. If the UK had a problem with it, we would have to change it.

      Dont let this bullshit list or bullshit idea of a ‘list’ make things seem better.

    • Anonymous says:

      If Cayman had the largest military budget in the world, the second most amount of nukes and 900 military bases around the world I can assure you we wouldn’t be on the list either

    • Anonymous says:

      You might want to stop calling us criminals when we are a very large chunk of your remaining financial business and you really need us more than we need you.

      • Anonymous says:

        agreed 8:49. even the queen has been stashing her money here. It’s amazing how the world bashes the island with being a tax heaven, when with a little research, there are many more right a stone throw away. smh

        • Anonymous says:

          I was speaking from the US point of view.

        • Anonymous says:

          No she hasn’t. A fund some of her estate is invested in, managed by the UK government, like most UK pension funds, is structured through Cayman and ultimately invested in stocks the world over. No one ‘stashes money’ in Cayman. Cayman is a conduit for onshore investments.

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