1) We can agree that tax evasion which is unlawful is unacceptable. But tax evasion is off the table as far as the Cayman Islands is concerned. The Cayman Islands has instituted proactive tax reporting on every bank account with every Treasury Department in the European Union, pursuant to the European Union Savings Directive 2005 with which it fully complies. Notably the statistics which are publically available show deposits from EU residents to be fiscally irrelevant. Furthermore the signing of tax information exchange agreements with G20 and other countries has accelerated recently with the result that the OECD regards the Cayman Islands as a white-listed jurisdiction and indeed, has recently completed a very detailed and highly favourable review of the Cayman legislative and regulatory structure from the perspective of transparency. It follows that the Cayman Islands is not a jurisdiction where individuals or corporations can “hide money”. It may be that you are confusing the Cayman Islands business model with that which until recently existed in Liechtenstein and Monaco and which to a great extent still exists in Switzerland.
2) Tax avoidance is lawful. But tax avoidance has nothing whatsoever to do with the Cayman Islands. Tax avoidance is entirely a function of domestic, in the present case, United Kingdom, tax legislation. Provisions may well exist that enable United kingdom corporations to obtain legitimate tax deferral but if these provisions are of concern or are no longer considered politically acceptable then it is simply a question of amending domestic United Kingdom legislation. There is a second point here which concerns the issue of enforcement. Particular questions can arise in the area of “transfer pricing”. But this again is exclusively a question of compliance with United Kingdom tax law and it is necessarily the case that the information that is required to secure proper enforcement in relation to these matters is available to HMRC or can be made available by enquiry of the UK taxpaying entity Furthermore information, to the extent a Cayman Islands entity is involved can be verified by HMRC through the use of the tax information exchange agreement between the United Kingdom and the Cayman Islands.
3) The tax neutral platform which the Cayman Islands provide to international financing transactions has nothing whatsoever to do with, and should not be conflated with, the issue of tax evasion. Cayman Island entities pay taxes in the jurisdictions where the profits are made in accordance with the laws of those jurisdictions. If by “tax haven status” you mean that the Cayman Islands collect revenues by way of indirect taxation instead of direct taxation, you are correct but that methodology has nothing whatsoever to do with the issue of tax evasion or tax avoidance.
Yours sincerely,
Anthony Travers
Chairman
Cayman Finance
www.caymanfinances.com
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cc. Mr Henry Bellingham MP
Mr Jack Irvine, Political and Media Advisor to Cayman Finance