Caribbean Countries Speak Out Against Unfair Criticism

by Philip Morton, Investors Offshore.com

16 June 2009

There are signs that Caribbean 'tax havens' are becoming more proactive in working together to counter the accusations made against them.

Speaking to Accountancy Age, Anthony Travers said that criticism from the Organisation for Economic Cooperation and Development on the role of the Cayman Islands as a centre for tax evasion is ‘one horrible mischaracterisation.

Business consultant and former diplomat Sir Ronald Sanders has proposed that Caribbean countries join together and address their grievances to the World Trade Organisation (WTO). Sir Ronald, in an interview with Inter-American Dialogue, pointed out that the end effect of American actions aimed at 'tax havens' was to move Caribbean business to jurisdictions with more political clout like Hong Kong and Singapore. 'Such action will be viewed in the Caribbean as discriminatory and unfair. Offshore jurisdictions service legitimate demands of individuals and corporate entities in developed countries that wish to take advantage of better fiscal and legal structures in the offshore centers of their choice,' he said. 'US corporations should resist attempts to restrain their trade, and affected Caribbean jurisdictions should test any such restraint by collectively filing formal complaints at the WTO. The issue is not about regulation but about global free trade. The majority of business conducted through offshore centres is legal in the country of origin of the investors, taking advantage of the benefit of the originating country's tax breaks and special provisions that have built up over generations of home country tax bills, often intended to serve some particular interest,' Sir Ronald noted.

The Cayman Islands has cooperated at the earliest stages, with anti-moneylaundering legislation dating back to 1990 and some 27 Tax Information Exchange Agreements - some completed as early as 2001. Speaking exclusively to AccountancyAge, Mr Travers claims: "They only count treaties in a form they approve". Travers said that the OECD’s guidelines on encouraging offshore centres to sign international tax standards illustrated that the issue was not about tax evasion, but rather EU countries seeking to control the flow of mobile capital. "It’s about tax competition not tax evasion. They [the EU] regard our low tax rates as threatening. People want to invest through a tax neutral platform. We’re tax neutral - we don’t add an additional layer of tax through our financial structures", he said.

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