The government of the Cayman Islands, which like other offshore jurisdictions faces continual criticism, has announced it is prepared to commit to an international tax convention.

“The Cayman Islands Government today announced that it is prepared to commit to the Convention on Mutual Administrative Assistance in Tax Matters,” according to a statement. Also, ahead of the Group of Eight meeting in Northern Ireland on 17-18 June, the government said it has accepted invitations from UK prime minister David Cameron to attend two events on 15 June.

While governments of large industrialised economies in the Group of 20 (G8) and other groupings (such as the G8) have criticised offshore jurisdictions for their low, or even lack, of taxes on some activities, as well as for their allegedly secretive nature, defenders argue they play an important role in a globalised economy, such as dealing with the problem of double taxation and assaults on vulnerable groups by rapacious governments and criminals. The CATO Institute think tank in Washington DC, for example, has argued that tax havens, on balance, help pressurise “onshore” governments into keeping taxes lower than otherwise would be the case, thereby boosting overall economic growth.

“The Convention on Mutual Administrative Assistance in Tax Matters is an OECD/Council of Europe multilateral agreement. It is designed to combat tax evasion and aggressive tax avoidance, by promoting cooperation among jurisdictions for the exchange of information among relevant authorities for tax and transparency purposes,” the statement added.

According to Alden McLaughlin, premier of the Cayman Islands Government, the jurisdiction has “engaged in substantive discussions with [UK] HM Treasury on the particulars of the convention”. “We are satisfied that the extension of the convention to our Islands will be done in accordance with the UK’s recognition of Cayman’s fiscal autonomy, and the well-established principle that countries have the prerogative to set their own tax rates,” he said.

The convention is in line with Cayman’s network of bilateral exchange of information agreements. This includes commitments to US and UK FATCA; the European Union Savings Directive; and the G5 pilot on multilateral automatic information exchange, the government statement said.

“We agree with the UK’s statement that there is ‘no point in dealing with tax evasion in one country, if the problem is simply displaced to another’,” McLaughlin said.

“With this in mind, we also agree that there should be equitable adherence, including within the G8 countries, to global tax and transparency standards. This will set the foundation for full and effective participation, by all countries, in the true spirit of these efforts,” he said.