Offshore laws pave way to major population growth
MLA Chris Saunders in the LA
(CNS): Chris Saunders, the opposition spokesperson on financial services, believes that government should have had a much more open and honest conversation with the people of the Cayman Islands about the draft laws coming before Legislative Assembly on Monday, which many say will turn the local financial industry on its head. Saunders told CNS that the International Tax Co-operation (Economic Substance) Bill and amendments to the existing local company control and companies laws will result in significant population growth, fueled by the increase in expatriate workers needed for the companies domiciled here — if they stay — to comply with the new laws, which are designed to keep Cayman off a European blacklist.
Saunders said there were a multitude of issues regarding this legislation, which was coming in “the last minute of the eleventh hour of the twelfth month” and will be rushed through the House without the necessary legislative research and analysis. He warned that the bills pave the way for significant changes, not just for the offshore industry but Cayman society as a whole.
The MLA for Bodden Town West, who spent many years in the financial sector, said he recognised that the changes will bring some potential job and business opportunities for local financial service firms and Caymanians but it will also mean a massive increase over the next two years in work permit holders, with the associated wider impact on society.
“Cayman needs to be ready for a population of 100,000 and government has done nothing to prepare the people for what could be coming,” he said.
Saunders said he was sympathetic to government’s situation, given the pressure coming from the EU, but with only 8% of the offshore business that Cayman does coming from Europe, he is joining other voices from the sector that have questioned whether this move to chase compliance is worth it.
“Appeasement is pointless,” he said, as he questioned whether he will be able to support the government’s bills, given the constant threats that will continue to the offshore sector even after these significant changes are implemented.
“The part that scares me”, he said, is that government has not done the research to see what the requirement for offshore companies to have an economic presence in Cayman will really mean to the economy and society. Nor, he said, has the government “engaged in any public consultation or education” about the consequences. The issues that now need to be considered in the face of an influx of more white-collar professional work permit holders are unlikely to be welcomed with open arms, he implied.
Saunders pointed out that the changes will increase costs for the large number of companies that will be affected by the change to the laws, so some of them will inevitably leave the jurisdiction.
He also believes that government will need to lower the cost of work permit and other fees in order to prevent an exodus of business, so while we could see the population explode, there will not necessarily be many benefits for the wider community.
Saunders also said that the changes to the Local Company Control Law, which will allow offshore companies affected by the legislation to set up shop in Cayman without a local business partner, will result in the very small group of foreign companies doing business here balloon, and warned that “with increase will come abuse”.
MLAs will be debating three pieces of legislation when the Legislative Assembly meets Monday, but these bills, which are set to fundamentally shake up the offshore industry, were only made public one week ago.
Saunders said that this was particularly concerning, given the importance and the lack of understanding in the wider community about the laws and what they will mean. He said that discussions about the issue of “economic substance” began some six years ago and there was no need for this last minute rush of laws.
Criticising government for “relying heavily on the larger law firms” to help them write the legislation, he said there had been time over the last year for much more open and meaningful dialogue.
The new bills have received mixed views from stakeholders in the offshore industry, with many of those involved wondering, like Saunders, whether the dramatic change will be worth it, while others remain concerned about the consequences of EU blacklisting that could also undermine the banking sector in particular, putting Cayman between a rock and a hard place.
Saunders said that the problem is that the demands are unlikely to change as the world’s richest countries go in search of imaginary mountains of taxes that will never solve their economic challenges. He said offshore centres are being squeezed out through constant demands and increasing costs, and the industry which underpins Cayman’s economy remains under serious threat.
See the bills, which are expected to be debated in the Legislative Assembly on Monday, in the CNS Library.
Category: Business, Financial Services, Laws, Politics
Very easy to fit 500,000 people in cayman maybe that will dilute the badminded blood and get the island running properly
plans are i going somewhere else…between politicians and rich who control them…natives dont stand a chance! period!
So new we have a choose a cruise berth for tourists or increase our population to 100000? Gotto choose one.
Oh, and I think Chris is wrong on the figure, I think it will be closer to 1200000, so basically twice outr current population.
Mr. Saunders is completely right , that the government doesn’t know what they are doing . They didn’t ask themselves a lot of questions or used their common sense . Where are you going to put 100,000
population and 500, 000 cruise ship passengers most days onow Grand Cayman.
The government needs to think allot more carefully about what and how they are doing things, because sometimes certain things can have a great repercussions .
I wonder if all the folks who once owned lavish penthouses and hotels along the Havana boardwalk in its heyday ever thought it would one day become poor people housing?
40,000 people is way to many for an island the size of Cayman , guess everyone will be walking to work as driving will be impossible ! lines at every store will take forever , that’s if one can find parking at the stores , the airport will constantly be swamped , tourists will stop coming , This idiotic plan Must be stopped period .
Well at least now I know who will be living in all of the new condos and homes that have been springing up that no Caymanian can afford.
And this expat too.
Only the rich white collar expats… that’s who. Squeezing out the middle class.
So there are no rich white collar caymanians? That’s a lie.
No one said that. They’re talking about the numbers here. Every expat that is employed in the Financial industry is making high 5 to low 6 figures at the get go.
Plus Caymanians don’t necessarily want to live among all of that fluff. They live closer to the districts where they are from, where their family and friends live. I am one of those that I am referring to and I know I don’t want to live around those pretentious prats. (But mostly because the strata fees are ridiculous)
Another reason many Caymanians don’t hang around the Stepford wives at Camana Bay.
I’ve lived here for 15 years and have many rich caymanian friends who would disagree with you. Maybe not on the living on SMB in a condo but about everything else.
I do not know you why you former slaves cannot understand or get it through your thick skulls Europe has never been about what is fair nor equal when it comes to anyone except a European and as soon you get that in your little pea like brains the better it is for you.
Umm, didn’t Europe ban the slave trade long before Caymanians thought it was wrong?
It did, but I need a scapegoat for all my personal problems.
Yeah but that doesn’t count because it’s not convenient to our modern day political differences with them
We hold slavery over their heads as if we have some sort of moral superiority even as the people who held slaves here were not from the British isles but many of the same Caymanian families that are still well off today from their ill gotten gains
The only people who enslaved Caymanians were Caymanians
No local Caymanian families were ever enriched through the practice of slavery. I do agree that many of the slave owning families were mixed race or even dark skinned
The Dubai of the Caribbean until they get voted out by the very menace they have imported in.Who are destroying and decimating everything Caymanian including our precious environment.This current infrastructure cannot sustain their grandiose ideas or their greedy expansion plans.The high crime rate is but and indicator of the coming revolt not by the cowardly native but by the imported rabble they need to sustain their lifestyles. Aaaaah Cayman real trouble on the horizon and gloomy sunsets in our future. Stop electing corrupt minions and ignorant political scumbags.
Increasing the population has the be the dumbest idea. I’ve come to realise politicians are a lot like pastors in the way they lie and deceit people for personal profit. Wake up people. Stop voting.
The hypocrites all congregate under similar roofs to ensure they secure an easy +30 votes in return for generous offering on Sunday.
No surprise.. birds of a feather flock together.
Glad I woke up and left that foolishness.
Government can’t get garbage pickup done right and crime is spiking like never before but here are these useless sticks in the mud trying to increase our population.
Appeasement is not worth it. The offshore jurisdictions needed to get together and collectively reject this nonsense because it will never be enough. We’ve had FATCA, CRS and many things before and the EU will use this new measure as leverage to introduce the next one, always with the threat of the blacklist. The EU is all for fair competition except when it’s with their complicated and expensive tax laws.
It’s only 8%. We can afford it as long as the US keeps sending their business here.
Meanwhile the EU has no problem with the tens of thousands of corporations registered in Luxembourg that have no economic substance whatsoever.
But then Luxembourg is a member of the EU.
Cayman can handle 200,000, but not if they come from the nearby islands and its jokers that are causing all the current problems. Bring in first world professionals.
What the bull you saying …. what a stupid comment
Quite intelligent to address importing low quality amateurs is the cause for Caymans eroding quality of life.
Cut and Copied from a Forbes Article by Erik Kain published April 2011
This picture contributes to a larger, yet equally depressing, labor-market story: The country has produced far too few good, stable, middle-income jobs over the past 10 or 20 years, not just the past three. One of the most prominent economists making this case is David Autor of MIT. “Employment polarization, whereby job opportunities are increasingly concentrated in high-skill, high-wage jobs and in low-skill, low-wage jobs.” Thus comes the frightening possibility of a “barbell” shaped economy, with jobs at places like fast food joints and universities—but not a lot of jobs in between.
With robotic mechanization, those low skilled jobs will be wiped out very soon and our Universities are still stuck on getting accreditation instead of investing in capital to raise and expand skill sets. Always the cart before the horse.
Maybe the University has such low confidence in itself in building an appropriate plan for the times that they would rather pursue accreditation(“paper respect”) than in earning world-wide respect by investing in smart capital. Or maybe they just don’t have the personal to see past the next semester.
Right, like the professional parking lot painters the other day.
You wont find quality in the nearby islands, just amateurs faking it until they make it supported by family relations or identity-political relations that married into the Cayman system. The painters were jokers, but they were an anomalies. You don’t see their kind taking up 6 figure jobs out of their depth like you see coming from nearby islands.
I would take the neighbouring islands any day over the racist “others” that come here and have no respect for us.
And that is why we have so many problems. People are getting hired to position based upon identity-politics. The best people are no longer the best jobs.
People like you project your racism onto others and then justify hiring only your race to positions regardless of the poor quality. Everybody losses in the end.
If you think Yardies respect us and our way of life you’re naive. They not only don’t respect anyone or anything they use Caymanians to the max.
Only if there is proper public transport. Can you imagine 200K cars in Grand Cayman?
100,000 electric cars, 50,000 electric bikes, 50,000 bikes. No noise pollution except the village idiot jamming his bass. But given the driving habits from the nearby islands, we cant get stupid to get smart. It will cost Cayman billions in the future because there is no plan to get smart.
Rubbish! TCFOTU.
Just implement personal and corporate income tax in Cayman and none of this will be necessary since we can no longer be classified as a tax haven. Anyway you put it, some one is going to have to pay the pro-libtard EU.
Yeah that’s what the French and EU want so that the rest of the world could be as miserable as they are.
Whatever Saunders opposes must be a good idea.
Cayman needs 100,000 persons to make it efficient to consider tax. Otherwise the non taxable income / rate of tax would be too high or the cost of administration would be running at a loss …using the current figures for population.
So, let’s get the tax breaks offered, SEZ’s and other incentives. The more expat s ..the more revenue = more for the local community.
Keep building …more PR and people coming.
Good night Hannah
Opposition continues to struggle to find things to attack the Government. This is a classic case of… if you dont have anything bad to say. Make something up!
I think this is called looking at proposed legislation and having foresight to issues it may cause which is exactly what the CIG is known to never do
They pass whatever tickles their fancy then spend the next four years complaining about it or trying to amend it because they overlooked something or didnt think it ahead
I just don’t see how Chris makes the leap to a population of 100K. Did he even read the law?
Other micronations have perfectly workable tax systems with around the same or fewer persons, not to mention small towns, and municipalities around the world have local taxes on goods and services
When are we going to stop hiding from the rest of the worlds reality
It is entirely possible to have a sustainable tax system and not create an actual welfare state (not a as a derogatory term for any state assistance)
No they don’t.
Gibraltar does…population half that of the Cayman Islands. Certainly better education and free health service!
I hope those that agree are closet masters of the thatch rope line…’cause we’re gonna need a lotta rope: https://www.youtube.com/watch?v=NQEfOUL2AqQ
At least the new influx will be able to pay their own way and help counter the recent mass importation of poverty that has overwhelmed our society and our budgets.
The mass importarion you are talking about, is cleaning your yard and your house, serves you well in shops, picks up the garbage, repairs you car, maintains your house, builts you furniture etc etc.
It are the local spoiled caymanian kids with no education, that are causing all the burdens on your society.
Those same people broke into my home a few years ago while on the job.
Thank you! This was never a welfare society. People made do with so little and now people that aren’t even Caymanian are demanding everything for free.
hope new elections soon come and we can recruit some sensible people in the House. don’t know how long Cayman can continue with this gand ln in charge,
What is this government thinking?
A population of 100,000 along with the cruise ship berthing facility bringing millions of cruise ship visitors to the country annually will completely overwhelm the already stressed infrastructure of the island.
This is what lack of leadership and an actual plan for the country looks like.
Nonsense. Cayman’s population density is one sixth of Bermuda’s.
In other words we could double the population to 150,000 and still be only one third the population density of Bermuda.
Talk of over-population is mindless scaremongering.
Yes we need to plan and develop the infrastructure accordingly but we’ve managed OK so far and the population has doubled twice over in recent decades.
The country has very limited recycling and the dump is a disaster waiting to happen increasing the population will only make this problem more severe with no solution in sight. Those self serving business owners who want to spike the population for their own personal greed ought to feel shame but that would be a miracle.
Visited Bermuda, nice place & people, wouldn’t want Cayman to get that built up if we can avoid it. And that’s the rub. Not ‘can we’ but ‘do we want to’?
Nice people as long as you are not there to take their jobs or buy up their land. Not going to happen. Way to go Bermuda!!
Go a step further and look at Singapore and their population density. Long ways to go yet!
Plop a fourth lane down and shut up!
(no, that’s not the solution, but the apparent direction we’re doing. AT LEAST they put some cycling lanes in.)
For those lawyers, accountants, service providers, real estate brokers who think this is going to be great for Cayman.
Question: do you have a bank account outside of the Cayman Islands?
If so: What’s your “economic substance” for having this bank account in Canada, UK or Switzerland?
Slippery slope isn’t it?
I don’t think purchasing from Amazon or itunes would qualify under the “adequate” and “appropriate” guidance for having such accounts. Close them up asap! Otherwise, stop the hypocrisy.
Genuinely, what’s your point? That someone resident in Cayman will need an economic presence in another country to have a bank account there? Says who? This is about whether entities incorporated in Cayman lose the benefit of being viewed as tax resident here – not whether Caymanians get viewed as not resident in a third country because they only have an account there.
If you were trying to say that the implications are that Caymanians will not be able to have an account overseas because they are not resident there, or that if they do have an account they will be tax resident overseas, that is a completely separate debate. And the latter is completely inconsistent with the theme of this article – you cannot simultaneously argue that someone with something as limited as banks accounts can benefit from being tax resident in Cayman and at the same time say someone whose only nexus to onshore is a bank account there is tax resident t there under the same regulations.
and the alternative is?
If you remove all that wealth sloshing around here things will be much simpler. I can still pay $15 for lunch but it will be in a deserted shop and probably limited to rice, plantain, and chickenfoot, not that it wouldn’t be delicious, just limited to what we can produce here. Add in the debt for a $200-$300 million dock, the rent on the government building, keeping the civil service at it’s current level, paying pensions and health care the government has an obligation to. Not something I think is better than what we have now.
Lol if you paying $15 for chickenfoot take out I feel sorry for you
stopped reading after ‘opposition spokesperson on financial services’…….
Why waste that much energy? One can stop reading at “Chris Saunders..”
The point is public education and preparedness for whatever the calculated or speculated outcome.
100,000 people and we barely managing what we currently have. I beg the Premier to one day on a school day try driving from East End at 6.30 in the morning and try to get to Walkers Road for 7.45. Just try it and you will see the frustration we live every single school day coming and going. Then you got the dump, water, education, crime, mental health and prison over population.
Oh stop it with your facts!
The premier like any other politician does not care about you.
If they would, the problems you mentioned wouldn’t exist.
We all know the solutions….
School traffic is caused by mommies and nannies that bring kids to private schools that are not FORCED to use a bus.
Expats, per work permit requirements, send their children to private schools and those schools do not have busses. If they did, the road traffic would be alleviated. Maybe a Dart built government high school in West Bay and one in Prospect will ease congestion. I’m only suggesting Dart as they seem to project manage builds well, within a budget, look great and are Eco friendly. And I bet they will start and finish before the part built John Gray extension is completed.
The additional time and costs alone are enough to drive much business away. You wouldn’t kmow it in Cayman, but in the US and UK financial world time and cost are important.
“Democracies die behind closed doors. . . . When government begins closing doors, it selectively controls information rightfully belonging to the people. Selective information is misinformation.”
Damon Keith – US appeals court judge
Who was the thumbs down, Alden?
Government needs to be brave now, not cow-tow to the master as has always been the case on such matters. And not traditional bravery either. You need the courage of heroes!
1. Cayman cannot handle a population of 100,000. the Infrastructure cannot be built to manage a population of 100,000. What sense is it to live in paradise if you can’t enjoy it because of overpopulation and all the issues that come with it.
2. Any population increase will negatively impact Caymanians, who are already struggling in their own country. Its 2018 genocide folks. The next step will be for the UK to insist that given the Camanian population is so small in comparison to the rest of the population, the voting franchise needs to be expanded to include others, and the rules around who can run for office need to be relaxed. Then Caymanians will have lost every bit of control of their own country.
3. These proposed legislative amendments represent likely THE most significant changes this country will face in the past 50 years!!! They deserve more than a rushed debate in the LA with no real research and analysis or public discourse. This is serious business and therefore this is no time to be acquiescing to the UK… my guess is they have said we do this or we get blacklisted and still have to deal with beneficial ownership. But when looking at these proposals and thinking how will Cayman work with these and beneficial ownership in place, I fail to see how we can survive this.
4. We have already proven beyond a reasonable doubt that no matter what we do we will never be seen by the powers that be to be above -board. We have jumped through every single hoop and still they come. Its not us, its them. They hide behind regulation, but its really jealousy and increasingly inventive ways to steal market share from us and try to sink Cayman. Much of the motivation is racist and/or otherwise ignorant.
5. The fact that we have been black-listed, brown-listed and threatened with same over the years, and yet, once we have shown them what Cayman’s landscape actually looks like, they have refrained, speaks volumes. We are a solid jurisdiction, especially when compared to the very same countries that are constantly attempting to get us to meet standards that they themselves cannot.
6. Therefore, given the above, let me propose something novel…. tell them to screw off.
Take the black-listing, its actually nowhere near as bad as what will come if these proposals go into place. Get the financial services industry to finally pony up some real money to properly and effectively launch a massive worldwide blitz campaign about our industry. advertise the strengths, dispel the myths and lets move on. I would imagine the UK has likely dropped the ‘if you dont like it then go independent’ bomb. But, independence has to be requested. They can’t force us to do it. So take the black-listing, continue to strengthen our product offerings and every single time they speak to us remind them that they are a bunch of hypocrites and they need to lead by example.
kowtow*
A population of 150K has been the twinkle in politicians’ eyes for a long time. I could never understand why Philip Pedley contributed to the growth at any cost mantra.
The Pedley report held up a mirror for everyone to see what things could look like. It promptly got shelved. While the twinkle remained. (Government behind closed doors as an above commenter might suggest.)
I truly hope that you remain a commentator on this board, nothing more.
Accept black listing and then a “worldwide blitz campaign”.
Really now?
Who will be strong enough to confront the government?
Many have confronted them. A juggernaut can only be stopped by a bigger Juggernaut.
The Biggernaut cometh…….summoned by your own hand, (to steal a phrase from the fabulously flawed Freddie Mercury).
Confrontation wouldn’t be necessary if the idiots in WB and GT didnt elect the same asses every 4 years
See above response beginning “nonsense”.
This is slightly more eloquent nonsense but nonsense nonetheless.
Overpopulation has been a boogeyman of most places throughout the last 200 years starting with Malthus in the 19th century and yet the data shows citizens’ lives continually improving on just about every measure.
What Cayman needs is not mindless scaremongering like this post but a plan to cope with the growth, to ensure Caymanians are able to benefit from it and to mitigate the downsides.
Strengthen the product offering whilst sticking 2 fingers at the regulatory regime, cause advertising and hearts and minds will outweigh regulatory pressure?. Yep sounds like an idea. Come to Cayman. What they say about us is unfair and untrue. We are really good at what we do -world class products. Of course if you invest in a Cayman product or transact with a Cayman corporation you will have a ton of additional paperwork to deal with on AML and your domestic tax authorities may tax you on every transaction as if they had taken place in your home jurisdiction, but you won’t mind will you. Why don’t we just b come the Cook Islands or Panama?
Yeaaaaa, under the hypothesis they are going to stay. ‘What if” is not “What is”
Clusterfck.
4:24pm
Have read your prediction many times on this board, been waiting, no cluster bombs yet.
My neck get tired from looking upwards.
Find another word please, I beg of you!
Clsterfck if they adopted these regs, clsterfck if they didn’t. They were caught between a clsterfck and a clsterfck.
4:55am
you have a very extensive vocabulary
love it!
Way to go CIG for being consistent. The buggy before the horse ideology is as relevant 50 years ago as it is today. It’s reassuring to know the CIG is predictable.
I don’t expect the skilled foreign population to increase that much, or necessarily at all – it may even have a cooling effect on the economy and real estate. As of Sept 2018, Exempt Co’s were 84.3% of all CI Registrations at 89,552. Each company must file an annual return of approx USD$853.66, which translates to recurring annual CIG Revenue of $76,446,960.32. The full economic impact is much more than that of course. The registered office fees are at least twice the annual return at around $1600 a year, or $143,283,200 to our various law and accounting shops – a lot of bread and butter for existing skilled workers. Local office rates will be competing on a global scale and in that, Cayman’s pricing might put us at an extreme disadvantage. If we can manage to retain 25% of that business going forward with bigger substantial presence investments and matching local employment opportunities, we may end up about the same. But, we’re just guessing until the full compliance notes are published. In any case, Mr. Sanders, pursuant to our collective signing on to BEPS in 2016, we don’t have a say in what happens next. It’s do or die.
There are of course the knock on effects. Each management company must pay CIMA a fee for each registered office they provide services for. Then you have large directors fees being paid plus audit and accounting fees. If we lose even 5% of all fees paid then Cayman is in trouble. Cayman needs plan for that rainy day. I hope there is a CIG think tank out there comprised of a brains trust not just the usual whose who.
Bring back Marco Archer….. Archer MAY 2021
what the rass I hearing ya? This issue was ongoing for 8 years why didn’t Marco do something when he was elected last term? Wayne too for that matter
There is indeed a brains trust on this issue.
So share it with us or do we have to do an FOI.
FOI? They amended the law a few weeks ago to reduce their obligations for disclosure.
Did I say I had a list? I know one person in it and it’s not my place to say.
I don’t predict Cayman losing much of anything. Maybe 1-2% at the most. 5% is doomsday talk.
Definitely. This “Cabinet” should be counting our pennies and not looking to initiate unsustainable monuments of ego and capital projects to cement a fantasized legacy. CIG Revenue is on the cusp of taking a big predictable (to us) hit, and it seems like they didn’t see that coming.
Chris Johnson you are correct. They need to take time with this. Let England know that we cannot rush this like they rushed Brexit and now wishing to God they hadn’t and is like a barrel of cats chasing their own tails. They need to bring in people like you and Paget-Brown and Cayman Finance to help them see the light. Tara is mistaken if she think she can do this on her own. We do not need these johnny come lately whose main whose main concern is how much their next bonus is mucking this up. Another thing, I heard on the news last evening that Cayman Finance is onboard with this, but I do not recall anyone from that department speaking out for or against this. Mr. Scott and Mr. Travers I would like to hear what your take is on this.
Mr. Travers does not comment on blogs which admit anonymous comment. However his published views on this and other issues are available on the firms website under “Advisories“.
More people yet where is the infrastructure like roads, schools etc. Very short sighted as usual. The middle class is being pushed down. You are either filthy rich here or a paycheck away from poverty. And I’m an expat (married to a Caymanian) and see that only rich expats benefit generally from this sort of thing. Handful of local wealthy people but most of the wealth is white collar financial industry expats.
But even the so called rich expats will see a major drop in theirquality of life in Grand Cayman. And what are we going to do about the dump with another 40,000 people soon?
We need more …the permit fees alone are worth it
Cayman don’t need any more people, in the 90’s life was much better here, all Caymanians had jobs, no traffic jams, a lot less crime/drugs etc.etc.
We had way more drugs in the 90s.
Yep, I remember then. You are right.
we need to get rid of the present egotistical pompous government and try to get some people with good old grass roots common sense in the legislature.
Alden and the other idiots are sending us to hell in a hand basket.
Good old grass roots and school leavers are what we are contending with. We need sophisticated people with Cayman’s best interests at heart. We need to change the eligibility requirements to include Caymanians that are equipped and motivated to help without avarice and ego. Until that day, Cayman will continue to reshuffle the deck every four years from a very shallow pool of kleptocrats.
Careful about what you wish for…
I think you mean the seventies.
lets split the difference and say it was best in the ’80s. 🙂
Interesting to notice I keep getting one or just two thumbs down. Why not just make a constructive remark instead. Putting your name to it I guess is out of the question. However I am always up for a debate, on CNS , on the phone or in my office. Your call.