Archive for the ‘USA’ Category

Once more, the truth about Cayman transparency

Wednesday, July 21st, 2010

I suppose the nature of this ongoing debate is that we at Cayman Finance keep restating the facts and those with alternative agendas keep ignoring them.

There are all types of unaccountable sensationalist blogs, publications and fringe socialist groups that like to appeal to the lowest common denominator in the name of ‘the common good’ and the Huffington Post is no exception.

Notwithstanding our recent advice to the editorial staff and indeed Ms. Huffington herself, the site loses all credibility when they continue to allege that the Cayman Islands are ‘secretive’.  For the record, one more time plain and simple, so everyone should  get it, in addition to the All Crimes Treaty which gives the Department of Justice full authority to obtain any Cayman Islands file, there is the Tax Treaty which extends the transparency to the IRS  for any tax matter and in addition, there is the IOSCO regulatory transparency.

Those who are able to read and understand these treaties, (not incidentally negotiated and signed by the US Government) will be trying to figure out what exactly the Huffington Post is talking about?  Perhaps what they mean is that they are upset that there are perfectly lawful provisions of US tax law which enable US corporations to avoid being taxed twice and which will allow those corporations to remain competitive in the global marketplace as against those corporations from jurisdictions that tax their corporates only once.  If that is the cause of the upset by all means change US law but the Cayman Islands has nothing to do with that discussion and making up fantastic numbers about “lost revenue” is going to lead to disappointment.

But do bear in mind also that there is an unintended consequence to rendering your global corporations less competitive (Levin/Dogget) and to rendering inward investment into the US so problematic that no one wants to bother any more (Hire Act ), particularly, one would have supposed, when you are the largest debtor nation in the world and survive only on inflows of borrowed money.

Posted in Fiction vs. Fact, USA, Uncategorized | 162 Comments »

Cayman Finance letter to Huffington Post

Wednesday, June 23rd, 2010

Dear Ms. Huffington:

Your recent post citing the Cayman Islands in a list of “tax havens” is unfair and inaccurate.  The Cayman Islands — far from being a “tax haven” — are on the elite OECD global “white list” of jurisdictions that meet the highest standards for financial transparency.

FICTION: The Cayman Islands are a “tax haven.”

FACT: The Cayman Islands has full tax transparency with The United States and with 27 members of the European Union.  The US Department of Justice has had full authority to make enquiry in relation to any file in the Cayman Islands since 1990. The anti-money laundering legislation of the Cayman Islands has been evaluated by the International Monetary Fund and by the Financial Action Task Force and is found to be superior to that Of the United States and most EU jurisdictions.

FICTION: Offshore accounts such as those in the Caymans are used by multinational corporations to avoid paying any taxes or to commit tax fraud.

FACT: American corporations already pay taxes in the jurisdictions where they operate.  Additionally, all profits of subsidiaries of US parents — regardless of where they are incorporated — are consolidated and accounted for and taxable in the U.S. as profits of the parent, except to the extent that legitimate tax deferral applies under current IRS code.
Offshore financial centers, like Cayman, enable American companies to compete internationally and reinvest their profits; treaties with the U.S.
ensure they do not evade taxes.

FICTION: U.S. policies regarding “tax havens” and tax deferral for US multinationals are linked.

FACT: The issues of offshore financial centers and tax deferral for US multinational corporations are separate.  The future of tax deferral laws in the United States is an internal U.S. tax matter.

FICTION: Corporations cheat the public out of tens of billions of dollars a year by using offshore tax havens.

FACT: The financial services sector in the Cayman Islands is enormously important to the economic growth of the United States. Cayman financial services institutions pool funds from the international capital markets and direct those funds into investment opportunities in G20 jurisdictions. The impact of those investments in growing the American economy cannot be overstated.

FICTION: Money flows from the U.S. to the Cayman Islands, where it is hidden.

FACT: The favored location for Cayman funds to invest is the United States; the preponderant flow of capital is from the Cayman Islands into, not out of, the U.S.

Let’s keep the facts straight and avoid name-calling. Most of what Americans think they know about the Cayman Islands is wrong.  It¹s time to learn how our financial services industry is working to promote economic growth in the United States and around the world at http://www.caymanfinances.com.

Cayman Finance

Posted in Fiction vs. Fact, Tax Issues, USA | 136 Comments »

Positive Movement on US Legislation

Tuesday, October 27th, 2009

Three prominent members of the US House and Senate issued a joint press release outlining their proposed legislation to prevent US residents from unlawfully evading taxes.  The legislation includes comprehensive proposals to clamp down on tax evasion and improve taxpayer compliance by giving the IRS new administrative tools to detect, deter and discourage offshore tax abuses.

This entirely reflects the confirmations that Cayman Finance have received from key staffers in Washington in that the “list “based approach, favored by Senator Levin’s proposed legislation, appears to have been rejected in favour of a transparency based approach.  Whilst the legislative process has not yet got underway we are pleased that these proposals are entirely consistent with the approach suggested by Cayman Finance.

New regulations would force foreign financial institutions, foreign trusts, and foreign corporations to provide information about their U.S. accountholders, grantors, and owners, respectively.  Chairman of the Ways and Means Select Revenue Subcommittee, Mr. Richard Neal said ““This bill is a continuation of my efforts to reduce tax evasion by American citizens and bring more transparency to international banking.”

This is obviously very positive news for the Cayman Islands, which has been a fully transparent jurisdiction for the last decade and a leader in regulatory and compliance issues related to global finance.  We can only hope this will finally put to rest any and all efforts by G20 nations to portray Cayman as a ‘tax haven’ and that we will not be forced to repeatedly jump through the same old hoops to prove what must now be evident to anyone with knowledge of global financial markets – namely that the Cayman Islands is the last place on earth that individuals would choose for the purpose of evading taxes.

Posted in Tax Issues, USA | No Comments »

Tightening the noose

Friday, October 23rd, 2009

Last month French bank BNP Paribas announced to the world that it will stop operating in countries that are on the ‘gray list’ published by the OECD.  This decision, the first of its kind by any major bank, puts Panama and the Bahamas directly at risk of losing business and increases pressure on all gray-listed countries to conform to the OECD mandate.

While this type of gamesmanship will not affect the Cayman Islands today, due to our OECD White List status, it does raise concerns for smaller nations such as ours that the playing field will continue to be modified by G20 nations until they achieve their ultimate goal: the “one size fits all “global tax rate .The G20 nations intend to use every opportunity to raise taxes from any source in order to deal with increasing national debts.

With all of the recent focus on Cayman’s debt, which stands at a realistic 25% of GDP, it may surprise some people to discover that UK debt, according to their own statistics office, at the end of March 2009 was equivalent to 55.5% of GDP and unofficially, if unfunded public sector pension liability is included, may amount to three times that figure. Similarly France’s public debt rose to 73.9% of GDP in the second quarter of 2009, and estimates for the US put their figure at close to 90% of GDP for 2009 and is expected to top 100% in the near future.  Little wonder then why these large economies are seeking to exercise their combined might to force smaller nations like Panama, the Bahamas, Barbados, and even the Cayman Islands to change their policies on taxation.

The belief shared by the G20 nations is that low tax regimes are ‘unfair’ and rob their governments of desperately needed tax revenue.  What this theory fails to consider is what drives the economic growth of these large economies.  The answer is not tax dollars, but investment dollars.  And without tax neutral jurisdictions, like Cayman, it would be more difficult, not less difficult, for onshore jurisdictions to attract international pools of investment capital that find their way into these economies.

So the question is:  Will the G20 nations recognize the negative impact to their economies by excluding their own financial markets from accessing offshore financial centres? By attempting to put the squeeze on offshore centres they may unwittingly be tightening the noose around the neck of their own economies.

Posted in Agreements and Treaties, Corporate, Fiction vs. Fact, G20, OECD, Tax Issues, USA | No Comments »