The first quarter of 2011 saw the Cayman
Islands government continue to build on its comprehensive network of tax
information exchange agreements as part of the government’s overall
international tax transparency programme.
The negotiating team concluded talks
with two countries resulting in agreements that were initialled and presented
for mutual authorisation, whilst the Cayman Islands government signed two more
tax information exchange treaties, bringing its total number of completed TIEAs
Of significance is the diversity of
countries with which the government has been in or has concluded negotiations,
reflecting continued interest from important global markets in the Cayman
Islands financial services industry.
Prior to the close of 2010, the Cayman
Islands government announced it had completed negotiations with Indonesia,
quickly followed up on 20 January 2011 with an announcement of the completion
of talks with Spain.
A key outcome of the agreement with
Spain that will take effect upon its entry into force will see that country no
longer classifying the Cayman Islands as a ‘tax haven’ under its domestic
Both agreements are expected to
strengthen economic ties and facilitate commercial relationships between the
Cayman Islands and those two jurisdictions. The agreements are currently
proceeding through the necessary authorisation processes on both sides to allow
them to be signed and entered into force later in 2011.
In parallel to this successful
negotiation activity, the Cayman Islands government signed TIEAs with two
countries of global economic and political significance: Japan in February 2011
and India in March 2011.
The agreement with the Japan – marked by
a signing ceremony at the Japanese embassy in London – builds on many years of
successful commercial ties between Japan and the Cayman Islands. The agreement
also includes provisions for pensioners, students, government employees and
residents of Japan, in that they will not be subject to double taxation, hence
only paying taxes in one jurisdiction.
The accord with India – commemorated
with a signing ceremony in the Cayman Islands – is also considered significant
given that nation’s ever-increasing importance as one of the world’s fastest
Cayman’s TIEA with India also reinforces
economic ties being forged between the two countries. The Cayman Islands
Government is currently working closely with Indian cardiologist and entrepreneur
Dr Devi Shetty and his team on the proposed Narayana Cayman University Medical
Centre. It is anticipated that this project will commence construction later in
2011 in the eastern districts of Grand Cayman.
In addition to Spain and Indonesia, the
Cayman Islands currently has four agreements awaiting signature – Italy,
Greece, South Africa, South Korea – and is in negotiations with many more of
the world’s major economies.
Cayman’s network of tax information
- The Cayman Islands is on the Organisation for Economic Cooperation and Development’s ‘white list’ of jurisdictions that substantially implementinternational tax standards and has 22 bilateral arrangements with the following countries for the provision of tax information: Aruba, Australia,Canada, Denmark, Faroe Islands, Finland, France, Germany, Greenland,Iceland, India, Ireland, Japan, Mexico, the Netherlands, Netherlands Antilles,New Zealand, Norway, Portugal, Sweden, the United States and the United Kingdom.
- The proportion of agreements between the Cayman Islands and OECD, G7 and G20 member countries is as follows:
- The Cayman Islands has agreements with six of the G7 countries and is awaiting signature on one agreement (Italy).
- The Cayman Islands has agreements with 11 of the G20 countries and is awaiting signature on three agreements (Italy, South Africa, South Korea)
- The Cayman Islands has agreements with 17 of the 30 OECD member states and is awaiting signature on five agreements (Greece, Italy, South Korea, Spain)
The Cayman Islands Tax Information Authority
- The Cayman Islands competent
authority for tax cooperation arrangements is the Tax Information Authority,
established under the Tax Information Authority Law, 2005. More information on
the Authority can be found on www.tia.gov.ky.
- The Tax Information Authority also administers bilateral agreements with the 27 EU member states in relation to the automatic reporting of savings income information, in effect since 2005. The Cayman Islands does not operate a withholding tax.
- Aendments to the Tax Information Authority Law were made in December 2008, which provide for a parallel ‘unilateral mechanism’ for cooperation in tax matters that can be used in addition to bilateral agreements. The mechanism is designed to reflect OECD technical standards for transparency and provision of information.
Cayman’s work on the OECD Global Forum on Transparency and Exchange of Information on Tax
- In the area of tax transparency, the OECD’s Global Forum on Transparency and Exchange of Information on Tax – in which the Cayman Islands has asserted a eadership role through its involvement in both the Steering Committee and Peer Review Group – marked a milestone at the September 2010 Global Forum meeting in Singapore when the initial assessments under the Peer Review Programme were approved.
- The Cayman Islands was one of eight countries – and among the first in the world – to be assessed under the Peer Review Programme. The assessors identified, “… a well developed legal and regulatory framework” and the report also identified areas that could benefit from improvements. The assessors also reported that, “in respect of access to information, the competent authority of the Cayman Islands is invested with broad powers to gather relevant information.”
- The Cayman Islands work with the Global Forum continues to be significant based on three core areas: Cayman will be assessed as part of the second phase of the Peer Review Programme throughout 2011; the government will be implementing recommendations from the first phase of the Peer Review, and; policy specialists from the Ministry of Finance will be undertaking assessments of Global Forum member countries as part of Cayman’s involvement in the Peer Review Group.