Industry rejects Dutch blacklist over low tax rate

| 10/01/2019 | 15 Comments
Cayman News Service

Jude Scott, CEO Cayman Finance

(CNS): The decision by the Dutch government to publish its own subjective “blacklist”, which included the Cayman Islands because tax rates are lower than in the Netherlands, is unusual and ignores the facts, especially as Cayman has had a tax information exchange agreement (TIEA) in place with the Netherlands since 2009, according to the financial services industry body, Cayman Finance. The TIEA facilitates the exchange of tax information to enable better tax collection by the Dutch and supports investigations into alleged tax evasion, officials said in a release Thursday, adding that Cayman annually automatically exchanges information with tax authorities in over 100 countries.

Cayman Finance echoed comments made by government last week following the surprise emergence of this separate blacklist, which comes in the middle of a battle Cayman and other offshore financial centres are having with the wider European Union about its blacklist, which is set to be reviewed in February.

The blacklisting also comes just a few weeks after Cayman Islands lawmakers passed far-reaching legislation that will change how offshore companies domiciled here do business and pave the way for them to meet economic substance requirements.

Cayman Finance said the Dutch government had failed to take into account Cayman’s demonstrated adherence to international standards for transparency or participation with the OECD’s BEPS Inclusive Framework and ignores its engagement with the EU’s Code of Conduct Group over the last two years to address concerns regarding economic substance.

“While discussions and negotiations relating to this and other blacklists are government-to-government processes with the Ministry of Financial Services taking the lead with regard to the Cayman Islands response to this development, Cayman Finance stands ready to support the government as we protect, promote, protect, develop and grow this important pillar of the Cayman Islands economy,” said Cayman Finance CEO Jude Scott.

“As such, we wholeheartedly reject this attempt to tarnish the reputation of the Cayman Islands and our financial services industry, which has been established as a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world benefitting developed and developing countries,” he added.

The Cayman Islands does not have double taxation treaties and so doesn’t pose a risk of aggressive tax avoidance. It is tax neutral and adds no additional tax to financial services transactions in its jurisdiction. Investee entities and investors are still subject to reporting and paying their home jurisdictions’ relevant taxes. The Cayman Islands also meets or exceeds globally accepted standards for transparency and cross border cooperation with tax authorities and law enforcement, Cayman Finance added.

“At the same time that the Dutch government has taken this unusual decision to give the Cayman Islands this classification, international policy makers continue to recognise the vital role Cayman’s financial services industry plays as a strong partner in combatting corruption, money laundering, terrorist financing and tax evasion,” the industry body said in a statement about this latest blacklist.

It said the definitions of tax havens by leading international organisations do not apply to the Cayman Islands as the legal, regulatory and legislative basis for the financial services industry here clearly demonstrates it is a transparent, tax neutral jurisdiction and not a tax haven.

“Cayman Finance encourages authorities in the Netherlands to consider all the facts before taking such a position about a globally beneficial and well-regulated jurisdiction like the Cayman Islands,” officials added.

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Category: Business, Financial Services

Comments (15)

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  1. Anonymous says:

    “The Netherlands, a Tax Avoidance Center, Tries to Mend Its Ways”

    https://www.nytimes.com/2018/09/20/business/netherlands-tax-avoidance.html?action=click&module=RelatedCoverage&pgtype=Article&region=Footer

    It’s hard to take Netherlands blacklisting anyone seriously.

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  2. Anonymous says:

    Interesting – the Netherlands is currently under investigation by the EU for giving Nike “illegal” tax breaks. Anyone say karma?
    https://www.nytimes.com/2019/01/10/business/nike-netherlands-eu-tax-breaks.html

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  3. Anonymous says:

    Since the Dutch have now Black Listed Cayman it might be a good time to review the Tax Information Agreement with the Netherlands. There should be consequences for the unjustified Dutch action.

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  4. Anonymous says:

    What about the official government statement?

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  5. All Clogged up says:

    Unnah need to deal with that teachers strike 5 days from now, bunch of weed heads look at that fool of Alden going there to make a fool of Cayman and himself

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  6. Puritan Orange vest says:

    Its by far no coincidence that Dutch too are about to have a serious walkout & strike of teachers and professors on the 15th Of March 2019 in the Nederlands. i wonder if they are going to blame the Tax havens for that too. This European hegemony is bankrupt and failing. Our poor leaders are off to lalala land believing they going to get recognition for providing moral support for expediting our demise so as to prop up their socialistic regimes full now of immigrants. Nothing but scumbag 21st century colonialist.

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  7. Anonymous says:

    Jude, please explain what being on the black list mean and what problems will ensue. Why should the government continue to run around catering to them. Can’t we just tell hem yo go fly a kite or windmill, whichever is more convienent for them. We will never please them so why try?

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    • Anonymous says:

      Alternatively Cayman should blacklist the Netherlands. It seems we are always caught with our pants down. Turn the table around for once and grow some balls!!!

    • Anonymous says:

      We need to just ignore them and go about our business. Too much smoking taking effect of their brains!,

  8. Anonymous says:

    There’s only two things I hate in this world. People who are intolerant of other people’s cultures and the Dutch.

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Cayman News Service