OECD says Cayman tax regime not harmful

(CNS): As Financial Services Minister Tara Rivers prepared to steer another dozen pieces of legislation relating to the offshore sector through the Legislative Assembly today (Wednesday), a new assessment by the Organisation for Economic Co-operation and Development (OECD) found that this jurisdiction and 11 others with low or no tax regimes are not harmful to other countries. Tara Rivers was expected to present several amendments to the LA to ensure that Cayman meets the latest raft of international standards, while the OECD-led 131-country coalition has given Cayman the nod of approval.

The OECD report found that the economic substance requirements introduced in January and the domestic legal framework meets all aspects of the standard.

Despite the positive findings, Cayman remains under the eye of the Caribbean Financial Action Task Force (CFATF), and most of the laws that will be debated in the LA this week relate to recommendations made after the latest review, which found that Cayman was vulnerable in several areas to terrorist financing and money laundering.

According to the report, on 19 July the Inclusive Framework on BEPS (base erosion and profit shifting) approved for the first time results on the review of the substantial activities factor for no or low tax jurisdictions.

Anguilla, the Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands were all said not to be causing harm, while the United Arab Emirates, Jordan, Greece and Kazakhstan have work to do to address some areas that presented potential harm.

From 2020, the Framework for Harmful Tax Practices will start monitoring whether the tax laws adopted by countries in practice comply with the standards.