The European Union has added Cayman Islands to its tax havens blacklist along with Oman, Fiji and Vanuvatu accusing it of failing to crack down adequately on tax abuse. Other countries to be added to the blacklist are Panama, Palau and the Seychelles.
The EU has accused Caymen Islands of not having “appropriate compliance measures” in place to prevent tax abuse by allowing firms to register in Cayman Islands despite having minimal physical presence in the territory. It is notable that Cayman Islands has no income tax, capital gains tax or corporation tax.
EU had earlier placed the Cayman Islands on a ‘grey-list’ and gave it time to introduce new laws to tackle tax insufficiencies but did not feel that it had adequately implemented the reforms by the specified deadline. In October 2019, Cayman Islands had announced that it would make information on the beneficial ownership of companies, public.
The Cayman Islands is the first UK territory to be added to the EU blacklist. A lobby group for Cayman financial services industry has expressed hope that there would a reversal in the not-too-distant future. Countries in the blacklist face difficulties accessing EU funding programmes, while European companies doing business in those jurisdictions have to take additional compliance measures.
The list was started in 2017 by the EU to put pressure on countries to crack down on tax havens and unfair competition. Oxfam, which has campaigned on tax, said other British territories, such as the British Virgin Islands, deserve to be added to the list, as do some places within the EU. Turkey is another country which is currently on EU’s grey-list but was not moved to the blacklist despite concerns about its information sharing with some EU member states.
Date: 19 Feb 2020
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