CIG: Dutch blacklisting unjustified diversion tactic

| 07/01/2019 | 29 Comments
Cayman News Service

Amsterdam, capital of The Netherlands

(CNS): Government has accused The Netherlands of including the Cayman Islands on its separate blacklist as a way of diverting criticisms of its own tax practices by attacking legitimate tax regimes. Officials here said it was “unjustified” and “wholly lacking in fairness and credibility” to place Cayman on the list of 21 jurisdictions. Cayman found itself on the latest blacklist coming from a European country last month and the local government has said the only reason appears to be because the corporate tax rate here is lower than any EU state. The move is also fueling concern that constant appeasement by the Cayman government of onshore countries is not working.

In a short statement from the premier’s office on Friday, officials said that despite the unjustified move, Cayman would  continue the longstanding commitment to global standards and working with the international community to improve their effectiveness.

“The Cayman Islands Government regrets the unjustified ‘blacklisting’ and rejects it as wholly lacking in fairness and credibility. It is unfortunate that The Netherlands has chosen to attempt to divert criticism of its own tax practices by attacking the legitimate tax regimes of other jurisdictions,” the statement read.

“This ‘blacklisting’ does not take into account Cayman’s demonstrated adherence to international standards for tax transparency, or participation with the OECD’s BEPS Inclusive Framework, and ignores our engagement with the EU’s Code of Conduct Group over the last two years to address their concerns regarding economic substance,” officials added.

The listing comes less than three weeks after new and far-reaching legislation was steered through the Legislative Assembly to meet the demands of the wider European Union and prevent Cayman from being blacklisted by all of the member states in the list produce by the EU last year. The laws pave the way for offshore exempt companies domiciled here to have a greater substance and to do actual business in the Cayman Islands.

But many have said that the constant appeasement of jurisdictions such as Cayman and other offshore financial centres labelled as tax havens is not preventing onshore, larger countries from continuing to attack their financial industries.

Anthony Travers, the former chair of Cayman Finance an outspoken advocate for the offshore sector, is one of a number of people who believe the policy of appeasing isn’t working and the blacklisting should not come as a surprise.

“The difficulty of attempting to deal with the EU and the OECD in relation to their ridiculously entitled ‘harmful’ tax practices initiative, whether through the introduction of economic substance legislation or howsoever, is well illustrated today by that paragon of tax avoidance techniques The Netherlands which, when I last looked, was a member of the EU, now introducing its independent ‘black list’ including the Cayman Islands,” he wrote on his website following the publication of the Dutch list.

Travers, the chair of the Cayman Islands Stock Exchange Board, said the government’s appeasement was rendered more difficult “when dealing with a multi-headed hydra comprising, it seems now, the EU, the OECD and each independent EU jurisdiction”.

He has suggested that “someone, anyone, explaining precisely what is ‘harmful’ about Cayman Islands tax structuring” would be a better place to start, as the EU and the OECD must believe that the Cayman Islands investment vehicles will be “harmful“ unless taxed twice or otherwise rendered uncompetitive through what he described as the “entirely novel and entirely fanciful economic substance initiative”.

No one has the slightest idea what this means, Travers wrote, except that for Cayman it cannot possibly mean anything good, as he accused the EU of making up the rules as it goes along.

“And since a satisfactory explanation cannot, as a matter of logic or international tax law, be forthcoming, we should ask how precisely a policy of appeasement is intended to achieve an outcome that does not secure the EU and OECD objective,” he added.

The decision by The Netherlands to create its own blacklist comes ahead of the anticipated review of the wider European Union blacklist update, which is now expected to be revised in February. Although the government believes the laws it passed last month should ensure that Cayman is not blacklisted, there are no guarantees that the jurisdiction will not be on a new grey-list, or watch list, as the EU seeks to monitor how the new laws work.

The ongoing pressures and threats from blacklisting, which would have a negative impact on the offshore sector, are being weighed against the increase in costs for the industry. And as government seeks to balance these issues, it is also engaged in a direct battle with the United Kingdom and its demand that the jurisdiction introduces a public beneficial ownership register, following the passage of Sanctions and Anti-Money Laundering Bill in the British parliament.

Although the original demand had been for that to happen by the end of 2020, the UK government has said that it will not impose an order-in-council immediately if there is no register at that point but will allow Cayman and other overseas territories impacted by the legislation another three years to implement the register, by which time the UK hopes the registers will be a global standard.

While the Cayman government has welcomed the additional time, the premier has stated that Cayman has always been willing to comply if that is the case. But speaking in the Legislative Assembly last month, he expressed doubts that public registers would be up and running in every country, even by 2023.

Print Friendly, PDF & Email

Tags: , , , , , ,

Category: Local News

Comments (29)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    Many many thanks to Mr. Anthony Travers for his dedication and efforts in defending the Cayman Islands financial industry.

    Our small island nation is being forced/coerced to implement various measures – due to larger countries tax practices.

    I do agree with the public register on beneficial ownership, starting with the US, UK and EU doing it first, as an example for the rest of the world. And yes I do also mean places such as Isle of Man, Guernsey, Nevada and the biggest “harmful” place of tax policy – Delaware.

    Again Mr. Travers thank you for what you do for my beloved country.

  2. Anonymous says:

    The Dutch have hundreds of years of experience of maintaining colonial regimes in South America, the Eastern Caribbean and S.E. Asia with the objective of extracting wealth and concentrating it in the Netherlands. Over the past 2 decades they (and other colonial powers) have discovered that they no longer need armies, navies and brutal overseers – now they just publish black lists and the slaves fall all over themselves to comply with Massa’s wishes.

  3. Anonymous says:

    Michael Caine in Austin Powers said it best…

  4. Anonymous says:

    How hypocritical to say that having no taxes is harmful. There is a reason their citizens put money in offshore accounts: They know that TAXATION IS THEFT!

  5. Anonymous says:

    Financial World causing confusion at the lower echelons of society. At the upper echelons, the money people are all happy.
    Any bets that this creates CI Gov expenditure and probable expansion of government to be paid for by us minions?
    This is just an interim step while they figure out how to tax sun, wind and rain. Air will be last, but it is on the horizon.
    F&$**&^ B@#^!$##.

  6. Musical Yoots says:

    Dats cool. We’ll just pass dem by pon de left hand side.

  7. Anonymous says:

    cayman shooting the messenger….

  8. Anonymous says:

    Taxation without representation? Of course we’re tax free. We don’t need to pay tax and never will. We shouldn’t tax any company since no one owns this Island so, the wanna be politicians stop acting like you do and the foreign countries can suck it if they don’t like it.

  9. Anonymous says:

    Edamned if you do edamned if you don’t.

  10. Anonymous says:

    No real surprise here, I said this months ago that the EU will never support Cayman so why bother trying to appease them? Great to see Tony Travers with an opinion that actually makes sense.

  11. Raffaelle says:

    You absolutely right 9:18 the UK will back them all the way to the EU bank. Its only or idiotic political @$$#%!& who don’t see the sick little mind games that are being played against us constantly and that our financial industry is being prostitute to pave the way for them.

  12. Naya Boy says:

    NO 9:13pm Curacao Aruba and Bonaire are reserved for South America’s most notorious drug barons and corrupt officials to launder and gambling their illicit monies and they are right next to Venezuela’s despot dictator and his underlings. How dare you How dare you! Highlight the European hypocrisy and double standards. Ask the Dutch if they find Natalee Hollway yet???? Our leadership is so both dumb and spineless.

  13. Anonymous says:

    It’s disingenuous how a country well known for its competitiveness as a low-tax regime can blacklist it’s own competition.

  14. Anonymous says:

    No more Heineken for me.

  15. Anonymous says:

    Has anybody asked the local Citco office what this means for them?

  16. Anonymous says:

    The Dutch were right on this.

  17. Anonymous says:

    Now the UK has shot itself in the foot with Brexit, the EU will back the Dutch all the way.

  18. Anonymous says:

    Was Curaçao also on the blacklist? 😉

    • Van de Jackass says:

      Of course not 9:13pm God forbid we should have some fairness in this financial blacklisting.

    • Anonymous says:

      While one could construe this act as hypocritical, it could just as easily be framed as being protectionist or supporting their OT over another nation’s

      The fact of the matter is with the UK now trying to flip the bird at the EU, OTs like Cayman will be easy pickings and likely collateral damage

      You can send your edible arrangements in appreciation to Jacob Rees Mogg, Boris Johnson or Nigel Farage (and all three if you are feeling generous about being poorer past March 29th)

      But fear not it wont be long before the ire of Trump shifts from the west to the east as well, he has attacked all his traditional allies and coalitions the US is a part of, (Canada, Mexico. NATO, etc) It wont be long till the tariffs are put on the UK as the global markets

      You’ll be begging for Bernie Sanders and Jeremy Corbyn then

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.