In August the Organisation for Economic Cooperation and Development moved the Cayman Islands to its white list of countries that have substantially implemented OECD standards for tax information exchange.
The move followed after the Cayman Islands government signed its 12th Tax Information Exchange Agreement, a number previously set as a threshold by the OECD.
“For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre,” Leader of Government Business McKeeva Bush said.
“The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”
The grey and white lists first appeared in April when the OECD Secretariat was asked to present a progress report on the implementation of OECD tax information exchange standards to the G20 meeting in London in April.
At a meeting of the G20 finance ministers in September the organisation set a March 2010 deadline for tax havens, placed on the grey list of countries that have not yet substantially implemented the standards, to sign tax agreements and improve tax transparency or face sanctions.
Much of the G20 efforts in targeting alleged tax havens have centred on OECD-style tax information exchange and since the G20 summit in April more TIEAs have been signed than in the first five years after their inception.
In addition to increasing the number of jurisdictions adopting the tax standards, the emphasis of the OECD has now shifted to enabling the proper functioning of the agreements through the introduction of a monitoring and peer review system in the Global Forum on Tax Information Exchange and Tax Transparency.
The Global Forum meeting in Mexico on 1-2 September introduced a Peer Review Group, which is charged with ensuring that treaty partners in TIEAs receive the desired information, in the format and time-frame they require, to enforce taxation.
The Cayman government is currently in advanced stages of negotiating further TIEAs with Italy, Mexico, Germany, France, Australia, Portugal and Canada.
In addition Cayman has enacted legislation and developed a mechanism that allows it to exchange tax information unilaterally with a number of other countries. However, this mechanism has not yet been approved by the Global Forum.