Cayman FSA Responds To OECD List

by Amanda Banks, Tax-News.com, London

08 April 2009

The Cayman Islands Financial Services Association has this week denounced the OECD’s decision to ‘grey’ list the Cayman Islands despite its evident commitment to the OECD standard.

“The Cayman Islands Financial Services Association is extremely disappointed to see the inclusion of the Cayman Islands in the OECD ‘grey’ list. It had been hoped that the OECD would undertake a rational objective analysis of the tax transparency established by the Cayman Islands over the past decade. In reverting to its political origins, the OECD has not improved its credibility and indeed in acting in an arbitrary and prejudicial manner raises questions about the value that is attributed by the G20 to the cooperation in tax and criminal matters that the Cayman Islands has demonstrated.”

“The Cayman Islands has full and relevant tax transparency not only with the United States under the November 2001 Tax Information Exchange Agreement but proactive reporting with 27 European Union nations under the 2005 European Union Savings Tax Directive, the figures for which, not incidentally, show monetarily and fiscally insignificant deposits by European residents in the Cayman Islands. However, according to the OECD the Cayman Islands finds itself characterized with the wholly non-compliant nations, which are the root cause of the current tax evasion furore. The determination by the OECD to ignore the unilateral mechanism, which is well respected by a number of OECD members, shows the OECD still applies a double standard which clearly has nothing whatsoever to do with the good faith disclosure of information in tax matters, assuming that Cayman Islands financial institutions have anything of interest to disclose.”

“However we are encouraged to see that the OECD has now set an objective test for positioning on the ‘white’ list which is less than the total number of tax exchange arrangements that the Cayman Islands currently has in place. Accordingly, since the Cayman Islands government has throughout maintained its commitment to execution of further bilateral treaties, assuming its approaches are met in good faith, we anticipate that the OECD will be obliged to remove Cayman from its current list swiftly.”

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