Cayman Islands Given Until End Of January To Submit Plan For Adoption Of EU Savings Directive

by Amanda Banks, Tax-News.com, London

07 January 2004

The UK government has reportedly given the Cayman Islands until January 31st to formulate an acceptable compromise plan that will enable the British Caribbean territory to be bound by the rules of the European Savings Directive when it comes into force in 2005.

Although there has been no official word from the Cayman government, the deadline was supposedly presented to the Cayman delegation that visited London last month in a bid to negotiate concessions in return for the jurisdiction’s acceptance of the unpopular interest reporting rules.

According to reports, the delegation lead by Leader of Government Business the Hon McKeeva Bush asked for three major concessions including: recognition by the European Union of the Cayman Islands Stock Exchange; increased access for Cayman financial instruments to the European market; and investment in the country’s airport expansion.

Whilst it is unclear whether the British government has received these demands, or is willing to accept them, Paymaster General Dawn Primarolo told Cayman officials recently that the UK government may allow the jurisdiction certain tax concessions in return for its cooperation concerning the EU directive. However, she stated that the UK will not hesitate to enforce compliance if this cooperation is not forthcoming.

“Of course, the British government would rather this was not necessary, but remains committed to having all of the Territories on board (for the EU tax initiative),” observed Kate Joad of the Governor’s Staff Office in a statement last month.

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