An international law firm advising firms operating in the Cayman Islands has challenged a UK newspaper’s designation of the Caribbean island as a “secretive tax haven”, saying the jurisdiction co-operates with other countries over financial matters.

Charles Jennings, joint managing partner of Maples and Calder, was responding to an article published by the UK’s Guardian newspaper on 3 September. His comments were published today in that newspaper.

His remarks highlight how some wealth management practitioners are determined to counter what they see as a feeding frenzy of criticism of so-called tax havens, which are being targeted by large countries such as the US and Germany for allowing citizens to evade taxes.

“Your presumption that Cayman has prospered as a "secretive tax haven" as a result of a lack of transparency is incorrect. As confirmed in international reports over the last 20 years, the Cayman Islands has established itself as a leading financial centre for institutional and sophisticated international investors by encouraging the creation of a well-run and appropriately regulated financial services industry,” Mr Jennings wrote.

“Many banks here are branches of banks regulated in onshore jurisdictions under Basel II principles. Many Cayman hedge and private equity fund managers are regulated by the UK Financial Services Authority and many funds are listed on recognised stock exchanges. Multinational companies routinely disclose their overseas subsidiaries in their public annual reports. The Cayman Islands Monetary Authority, which regulates financial services businesses, often co-operates with overseas regulators,” he continued.

Mr Jennnings said: “You say that British ministers should, as a condition to allowing the Cayman Islands to borrow to fund infrastructure projects (such as schools), "demand that the islands' government institutes automatic exchange of tax information with all countries, rich and poor alike". However, none of the G20 or OECD countries (including Britain and the US) currently automatically exchange information in this way with all countries.”

“Furthermore, you give no credit to the fact that, since the adoption of the European Union savings directive in 2005, banks have been required by Cayman law to automatically exchange information on EU residents' accounts with the tax authorities of all 27 EU states. Nor do you acknowledge that the Cayman Islands has had a tax information exchange agreement with the US since 2001, is now on the OECD "white list" for entering into the required number of tax information exchange agreements, is negotiating further tax information exchange agreements with other member states, and has introduced a unilateral mechanism for sharing tax-related information with other nations,” he added.