CIG to meet EU and OECD on ‘economic substance’ issue

| 16/01/2018 | 33 Comments
Cayman News Service

Premier Alden McLaughlin and Financial Services Minister Tara Rivers

(CNS): Officials from the financial services ministry have confirmed that Cayman has been invited to a meeting with the European Union and the OECD, along with five other jurisdictions, on the latest European grey-list. The ministry said the informal voluntary meeting was to discuss the definition of economic substance in the financial services sector here, which the Cayman Islands Government has committed to address this year to stay off the threatened black-list, even though they don’t really know what it means.

Reports this weekend indicated that Britain’s overseas territories could be used as pawns in the Brexit negotiations with the EU, which is putting pressure on the UK government to reveal more about those the EU has identified as tax havens. European officials are beginning to indicate that the BOTs that escaped the black-list may end up on it anyway, as the EU could use them as leverage in the current tangled and tricky talks.

It appears that London may not stand by its commitments to BOTs not to abandon them as Britain splits from Europe because the UK may no longer have the political will or power to protect them.

Cayman avoided the threat of being blacklisted by the EU and the possibility of sanctions, which could prevent companies based in this jurisdiction from operating in Europe, by making some as yet unexplained commitments that suggest the financial sector needs to address the lack of substance and presence in Cayman of many large European companies that are registered here.

CNS asked government for comment yesterday on the new threat that Cayman could still be blacklisted but received no reply. However, officials said that they had confirmed their willingness to attend the meeting with European officials, which is expected to happen soon and where the question of economic substance could be more clearly defined and answered.

“The Ministry of Financial Services emphasises that at this time the discussion is informal. All countries that are working with the EU and the OECD to more clearly define and address economic substance are to have this issue addressed by December 2018,” a spokesperson from the ministry stated.

In December the Council of the European Union published a black-list of 17 uncooperative nations, but more than 40 other countries were put on a ‘grey-list’, having agreed to take steps toward “abolishing harmful tax practices”. Cayman, Bermuda, Guernsey, Isle of Man, Jersey and Vanuatu were listed as “tax regimes that facilitate offshore structures which attract profits without real economic activity”.

However, so far no one has given a definitive explanation on what this means to our offshore financial services sector.

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Category: Business, Financial Services

Comments (33)

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  1. Anonymous says:

    All this about a newspaper article. If the EU screws you, which could happen, you will just have to cut back. They don’t control enough of your business to kill you off. If you sell the airline, the turtle farm, kill the development bank and collect even half of your hospital bills and student loans, you’d save enough money to keep doing what you do.

  2. Anonymous says:

    Taxpayers and taxable entities have a right and duty to pay all of their taxes due, and not a penny more. Every year, Trillions in GDP contributions are made by way of foreign accountancy and legal firms navigating their clients through the very complicated tax landscape around the world. The mechanisms they come up with are the product of researched compliance with foreign tax codes. OFCs, without these tax codes, are neutral by-standers and don’t have any input on this foreign tax advice, or law. Demonizing OFCs for foreign laws doesn’t make any sense, or fix the problem (if there is one).

  3. Anonymous says:

    Please stop this nonsense.
    The cayman islands is a place where the rich and criminals can hide and launder their money.
    This place is chosen, because of its ignorant and naive population, that has no idea how the real world works.

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    • Anonymous says:

      Wrong year McFly – get back in your DeLorean, and set destination clock to 1986!

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    • SSM345 says:

      We have more Financial Institutions registered with the IRS for FATCA and over 100+ jurisdictions for CRS than any other country in the world (90k+) and report their Investors to the respective tax authorities on a yearly basis so your statement is full of sh*t.

      Maybe check your own back yard whether its UK or US with regards to criminals etc hiding their money in London, Delaware and Nevada you absolute Muppet and you will note the money laundering capitals of the world.

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    • Jotnar says:

      As opposed to the ignorant and naive who post comments like this with zero understanding of how the international capital financing market works, or tax arbitrage.

  4. Anonymous says:

    It’s illogical to hold CRS-adopting OFCs responsible for the creation and flaws in the expansive volumes of international tax code – much of this complexity created during and after cleanup of WWII. If EU gov’ts are unsatisfied with their tax laws, they can go ahead and change them. We certainly did not author them. Sanctioning us, as a consequence of their clerical errors or omissions, will only result in an embarrassing hearing at the ECJU.

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    • Anonymous says:

      Need our top legal eagles to read the EU the riot act, because they do not have the right to take away the bread and butter of an island nation that is and has to be compliant whilst their own do whatever they will. Alternatively UKcould hold another referendum and this time the remainders will prevail and change that corrupt and bullying institution from the inside.

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      • Anonymous says:

        This business is not the bread and butter, but it is legal, and transparent via CRS, even per the tax authorities of the politicians that are throwing the tantrum. Just a thought: maybe there shouldn’t be 90,000 pages of tax code?

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    • Anonymous says:

      If parasites are attracted to certain flowers in the garden, it is perfectly rational to remove the parasite rather than the plant.

  5. Anonymous says:

    Invited by the worlds largest terrorist organisation. How lovely.

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  6. Anonymous says:

    Trump can save you, but you have to beg.

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  7. Cayman Hyperbowl says:

    How much more Cayman these colonial bastards have raped and pillaged and destroyed other people and countries for centuries Now when those places adapt the very same economic pariah programs and piracy policies it now becomes a CRIME because they now feel threatened by the same double edged sword they have used numerous times to achieve their global economic status and success . So yet again they now draft legislation and laws to continue the rape and pillaging to once again rob economic viability from those they have destroyed.

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    • Anonymous says:

      Yeah, it’s Cayman turn to rape and pillage and cause harm to millions of the poor and ill around the world.

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      • Anonymous says:

        Demented comment

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        • Anonymous says:

          It is quite accurate. By permitting the rich to immorally avoid paying taxes, the education, health care and safety of billions of the world’s most needy have been harmed. All to prop up a few thousand islanders.

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          • Anonymous says:

            How much have YOU paid in taxes last year? Because I have a suspicion you haven’t paid *your fair share*. How much have YOU donated to humanitarian causes? Or are you just another hypocrite always ready to have government confiscate other people’s earnings for your virtue signaling holier than thou posturing?

            Do you actually know what it’s like to have 40% of your earning confiscated? Do you actually know what’s it like to have 50% of your net worth confiscated to when a family member passes and wish to transfer their assets to their children? Do you actually know what’s it like to pay 2% a year on your home just to live in it and God forbid you run our of cash otherwise you’re in to fucking street with an ever growing debt? Do you actually know what’s it like to be taxes on money you have already paid taxes on?

            Do you actually know what its like to have a government just on mere suspicion have the ability to freeze your bank account (without any court order or due process) and have all your checks bounce to providers and even employees just because they *suspect* you made a mistake on your tax returns?

            Based on your cavalier bullshit, I seriously doubt it so why don’t you shut the fuck up you with your fucking morality bullshit.

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            • Anonymous says:

              Post of the Year. Thank you!

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            • Anonymous says:

              This post is offensive in its language. But it is more offensive in its content. Seeing taxes as theft and not as the basis to have a fair society where there is a decent standard of life for all is the marker of the greedy.

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              • Anonymous says:

                If governments spent the money responsibly, do not waste it, are not corrupt, and are not motivated by re-election as the single most important goal, you might have a point.

                Unfortunately, you do not.

          • Anonymous says:

            OFCs did not author the on-shore tax codes that permit the mechanisms of your complaint.

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  8. Top Colonial Feathers says:

    Europe has absolutely nothing to offer anyone but to export to other places their Socialist utopia agenda and terrorism these days. Why are we listening them anyway but our so called financial wizards and experts need desperately to placate their financial counterparts and their wealth nest to the detriment of our financial industry, which they claim they so love and cherish so much. Remember what they said they are here for us, so long as we give the UK and EU pricks want they want. Capitalism only works for the wealthy all others much be grateful and poor.

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  9. Anonymous says:

    Non-resident and Foreign-Controlled companies exist in every business jurisdiction on the planet.

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  10. SKEPTICAL says:

    Well so much for the premier’s Chamberlainesque “ Peace in our time “ statement when Cayman ended up on the Grey List. He should beware of the UK’s “ softly softly catchee monkey “ strategy when they are getting ready to cut us off at the knees.

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    • Anonymous says:

      I mean they were clear when they announced our placement that the “grey” was a temporary placement, this isn’t exactly surprising just sooner than the CIG expected probably

    • Fred the Piemaker says:

      Because its the Uk thats doing it – right.

  11. Anonymous says:

    And there is the Achilles Heel for Cayman, especially if its intention is to charge a fortune for foreign staff to come and work in Cayman. The entire basis of exempted companies shows the fictional nature of these companies’ Cayman connection.

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  12. Anonymous says:

    Advice to the Premier: See what Trump did with the Paris Accord… Perfect example how to deal with those eurofacists.

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  13. Anonymous says:

    Abolishing harmful tax practices = Business Friendly economic environment derived from businesses which we have been raping for decades, that have escaped the chains of our socialist utopia nightmare. So instead of being competitive and raping less, we prefer to simply destroy countries offering a better economic climate.

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