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Cayman Islands Commits To A Global Tax Convention Ahead Of G8
Tom Burroughes
10 June 2013
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 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.