Reviewing his recent overseas trip to Europe, Leader of Government Business McKeeva Bush outlined, on Monday, the current state of ongoing negotiations for tax information exchange, as well as the start of new talks with a number of countries. He said the government would be signing a deal with the Netherlands on 8 July but had reached technical agreements with several others.
Speaking in the Legislative Assembly on 29 June, he gave an update on what had happened over the last two weeks and what was in the pipeline. He noted that under his government’s new approach Cayman could look forward to signing with Australia, New Zealand, Germany, Italy and Mexico in the near future and that negotiations were well advanced with both Portugal and France. He also related that expressions of interests to sign TIEAs had come from the Czech Republic and Japan and the Cayman government had expressed its willingess, through the OECD, to enter into negotiations with other OECD member countries.
He noted the successful completion of agreements with the United Kingdom and Ireland, giving Cayman ten bilateral treaties in place. The signing of the Netherlands agreement in Holland next week will leave the Cayman Islands only one agreement short of the OECD’s requirement of twelve TIEAs.
Bush acknowledged the work that had been carried out by the previous negotiation team but said it was regretful that the former administration had not moved more quickly. “As a result the country was placed on the OECD grey list after the G20 meeting in April,” he reminded the House. He said when the new government took up office at the end of May, the OECD considered Cayman not to be fully co-operative as it did not have the minimum 12 agreements, which was negatively impacting the financial services industry, he said.
“Being on the grey list, particularly when some of our competitors were not, was causing damage to the reputation of the financial services industry,” he added. “It was also understood that not only did being on the grey list damage our international reputation as a financial services centre but that it also had some direct negative commercial effects as some clients were considering doing business elsewhere because of the attention the jurisdiction was getting due to being on the grey list.”
Given that financial services and the wider economy was already facing significant challenges due to the global downturn, being on the grey list made things worse, Bush said.
“The UDP administration decided to take a new approach to the negotiations on tax information exchange agreements with a view to being removed from the grey list as soon as possible, while at the same time ensuring that any new agreements were consistent with the interest of the Cayman Islands as a leading international financial centre,” he said.
Bush claimed the proactive approach was consistent with the commitment given to the OECD by the Cayman Islands, but was also necessary to demonstrate to the international community that Cayman is serious about engaging in cooperation with other countries in the exchange of information for legitimate enforcement of their tax laws.
“The Cayman Islands has no direct taxes and this government has no intention to change this situation. We want to, however, send the message that we are not a 'tax haven' but, on the contrary, we continue to be a responsible member of the international community that adheres to relevant international standards of compliance with respect to tax cooperation and hence should be properly recognised for what we are: an international financial centre that happens to be a small but significant country in the Caribbean – the use of whose regime adds significant value to the global economy,” Bush added.
He accused the opposition of playing politics while he was in Europe working on the agreements, but the fact was the Cayman Islands is on the OECD grey list and he said it was the new government’s job to do what is necessary to remove this jurisdiction from that list and restore its reputation.
“The reason why the opposition is where they are today is because they played politics with such matters and I have no interest in going that road. My job as leader of this government/Premier Designate, or whatever they are going to call me, is to get this country out of this mess, and my government is going to achieve that,” Bush added.