UK to force Cayman to make beneficial ownership of companies public

May 2nd, 2018

The Cayman Islands and other British Overseas Territories lost the political battle in House of Commons vote on May 1.

The vote to amend Britain’s Sanctions and Anti-Money Laundering Bill to force British Overseas Territories – which are not UK Crown Dependencies – to make registers of company owners public, may fundamentally change both Cayman’s financial services business model and its relationship with the UK.

The amendment to the bill, which now goes to the House of Lords for a largely procedural vote, will require all 14 remaining British territories to make beneficial ownership of companies registered in their respective jurisdictions public. The Cayman Islands has such a registry now, but it can only be inspected by certain personnel for the purposes of specific law enforcement or tax compliance requests.

UK and Cayman sources both speculated as to the reasons for why such a decision was made and the conciliatory version of the amendment was not accepted for debate. Many noted that a crucial Brexit bill concerning the operations of the single market once the U.K. leaves the European Union next year was up for debate in the Commons as well.

From Cayman supporters’ perspectives, it was the worst possible outcome.

Cayman London office director Eric Bush told the UK public radio: “We’re exploring all options. The decisions and actions taken [Tuesday] were taken in haste, were taken with misinformation, rhetoric and Hollywood jargon. The Cayman Islands government is not going to do that.”He also added that the actions taken are certainly a blow to the relationship, which shows a lack of trust, it shows a disrespect and disregard for the constitution.

Cayman issues Guidance on Compliance with CbC Reporting, FATCA, CRS

April 10th, 2018

New guidance on the obligation on large multinational groups to file a country-by-country report in the jurisdiction and also an update on Common Reporting Standard and US Foreign Account Tax Compliance Act reporting have been released by the Cayman Islands.

On March 29, guidance was released by the Cayman Islands’ Department for International Tax Cooperation (DITC) alongside the release of:

– The CbCR Notification Template (in CSV format);
– The Authorisation Letter Template; and
– The CbC XML Schema User Guide (Draft).

The guidance provides an overview of the OECD’s recommendations and of the Cayman law underpinning the CbC reporting regime (the Tax Information Authority Law (2017 Revision)), explains the obligation to notify which entity will file the CbC report, sets out the filing deadlines, how to complete the CbC report, and how the Cayman Islands intends to share the information required multilaterally.

The Cayman Islands recently pushed forward the deadline for filing CbC reports. The deadline was March 31, 2018, for those groups with fiscal years beginning in 2016 between January 1 to March 31, 2016. It was then required within 12 months of the end of any fiscal year, for those fiscal years beginning after March 31, 2016. The Ministry of Financial Services and Home Affairs has now announced the following: “A Reporting Entity resident in the islands must make its first CbC Report by May 31, 2018, if the CbCR Regulations require it to make its first CbC Report on or before May 31, 2018.” This provides additional flexibility specifically for those whose fiscal period begins in the first five months of the year.

In a separate announcement, the DITC announced that it has reopened the automatic exchange of information (AEOI) portal for notification and reporting in relation to the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).

The deadlines are:

– April 30, 2018 for notification (i.e. enrollment);
– May 31, 2018, for reporting for the 2017 calendar year.

Cayman eases deadline for CbC Reporting

February 16th, 2018

Authorities in the Cayman Islands have pushed back the deadline for notifying local authorities of which entity will file a country-by-country (CbC) report, and for filing the first reports.

On February 2, 2018, the extensions were announced as well as a confirmation was made that in early March 2018 CbC reporting guidance will be released and the Cayman CbC reporting portal will be launched.

Under the notification obligation, the reporting entity of an MNE Group with constituent entities resident in the Cayman Islands must appoint the individuals as the “Primary Contact” and the “Secondary Contact” for those constituent entities. The Primary Contact may be an agent of the reporting entity while the Secondary Contact must be a fiduciary or management-level employee of the Reporting Entity. Neither the Primary Contact, nor the Secondary Contact must be resident in Cayman.

The CbC Report must be made via the CbCR Portal by uploading an XML file in the format prescribed by the OECD.

The CbC report is one element of a new 3-tiered standardized approach to transfer pricing documentation proposed under BEPS Action 13. Under the framework, MNEs are required to provide aggregate information annually for each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. The reporting covers information on entities doing business in a particular jurisdiction as well as the business activities each entity engages in.

Budget of Cayman targets Budget Surpluses

November 4th, 2017

The Cayman Islands’ Premier, Alden McLaughlin, recently delivered the Cayman Islands’ first 2-year budget, which was notable for the absence of new borrowing or revenue-raising measures.

According to McLaughlin, his administration will continue to pay down debt and deliver operational budget surpluses to fund capital investment plans and provide for contingency against future economic shocks. He noted that taking the path of “fiscal responsibility” is crucial to giving businesses the confidence to invest in the jurisdiction.

Measures introduced previously to support economic growth will be maintained, including reduced import duties, lower business licensing fees, development concessions, and other measures to support small business. Also, the Government has committed to slashing at least 25% of regulations hindering small business.

McLaughlin reported on his recent visit to Brussels ahead of the EU’s planned year-end announcement to name jurisdictions it considers are not complying with global tax good governance standards. He said he explained about the reasons for the territory’s tax regime focusing on indirect taxes instead of direct taxes and outlined how the territory complies with OECD regulations, which he said places it in the same league as Germany, Canada, and the UK.

McLaughlin explained that the Cayman Islands has no double tax treaties allowing for the shifting of tax liabilities, and that businesses operating in the territory understand their obligation to pay taxes due in their home jurisdictions.

Cayman Islands argues Tax Haven title

October 29th, 2017

Jude Scott, CEO of the Cayman Islands’ financial services promotion agency, Cayman Finance, has decided to aim at a report labeling the territory as a “tax haven.”

Besides labelling as “tax haven”, the report on international financial centers, issued by the non-profit US Public Interest Research Group and the Institute on Taxation and Economic Policy, criticizes the jurisdiction for being slow to release private financial records and facilitating financial secrecy.

As to the criticism leveled at the territory, Scott noted that, not only is the Cayman Islands “transparent,” it has adopted more than 20 global financial standards and adheres to both the US FATCA rules and the OECD’s Common Reporting Standard.

“We meet none of the descriptions used by entities such as the OECD or Transparency International to define a tax haven. In fact, our system purposefully lacks any laws or regulations like double taxation treaties or foreign incentives that support the shifting of a tax base by foreign entities to avoid corporate taxes in their home jurisdictions,” said Scott.

“Reports such as this conveniently overlook how international finance centers like the Cayman Islands observe their commitment to global standards for transparency and cross-border information sharing with law enforcement and tax authorities,” added Scott.

Scott emphasized that the legislation and regulations adopted by the Cayman Islands make the jurisdiction a strong international partner to address any concerns.

Cayman imports fall by 2% in 1st quarter 2017

August 10th, 2017

The total value of all goods imported into Cayman in the 1st quarter of 2017 was CI$ 207.8 million, which is a drop of some CI$ 4.3 million as compared with the same period last year.

According to officials from the Economics and Statistics office, the decrease was due to a 6.1% reduction in the total value of non-petroleum products, which make up almost 89% of all imports into the country. The fall in imports of machinery and road vehicles, chemical and related products, and other commodities fell significantly.

The quarterly trade statistics bulletin reported a 4% increase in food imports and a massive 50% increase in petroleum and related-products, due in part to another increase in the price of oil on the global market.

However, this was not enough to offset the decline in other goods. With import duty a significant source of government revenue, the fall in the value of goods could have an impact on the public purse for those first three months of the year to the tune of more than $1 million.

Cayman has the Least Complex Tax Jurisdiction worldwide

August 2nd, 2017

In accordance with TMF’s Financial Complexity Index 2017, the Cayman Islands is the least complex jurisdiction as regards taxation and accounting requirements.

TMF’s Financial Complexity Index 2017 ranks 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific, and the Americas. The Cayman Islands is ranked 94th, which means that this territory has simplified tax reporting requirements and has low rates of tax.

Other least complex jurisdictions are Jersey (90th), Hong Kong (91st), the UAE (92nd), and the BVI (93rd).

The most complex jurisdictions are Turkey (1st), Brazil (2nd), Italy (3rd), Greece (4th) and Vietnam (5th).

Small Cayman businesses concerned over cost of finance

July 31st, 2017

According to the president of the Cayman Islands Small Business Association (CISBA), financial institutions are setting up entrepreneurs for failure because of the cost of loans. This was one of a number of issues that Dawn McLean-Sawney raised with the new minister for commerce, Joey Hew.

McLean-Sawney said small businesses need better concessions on loans to make payments viable.

Other difficulties the small business sector faced included the following:
– inadequate funding,
– too much red tape,
– securing venues to set up businesses,
– challenges based on definitions of micro (1-3 employees) and small (4-10 employees) businesses in provision of employee benefits.

Also, the small business sector needed more incentives, including a reduction in fees such as Customs and Trade and Business Licence fees, and encouragement for more women, especially single mothers, and retirees to be able to become small business owners.

CISBA, which currently has 120 members, was created to advocate for policies that are beneficial to local small businesses as well as to support and promote entrepreneurial spirit.

New Cayman financial services minister to advocate for offshore sector

July 26th, 2017

The new financial services minister of the Cayman Islands began her work as a voice for Cayman’s offshore sector during the recent visit to the United Kingdom for the Brexit meetings with the overseas territories. Tara Rivers was also advocating for the financial services industry, which she now has responsibility for in the new coalition government.

Rivers discussed Brexit, beneficial ownership and the EU screening process with both UK officials and industry leaders. Also, the minister visited the Embassy of China in order to discuss regulatory cooperation and China’s “One Belt, One Road” initiative.

According to an official release, “The Cayman Islands has always engaged with UK Government and industry on matters of bilateral and global importance”. Rivers emphasized the focus on “reinforcing the strength of our financial services framework by clearly addressing the legacy myths that affect our reputation among political leaders”.

Rivers was not alone in advocating for Cayman’s lucrative offshore sector, as Scott remained in Britain for two weeks, where he engaged with the international press as well as financial sector stakeholders in London.

“Cayman Finance, in conjunction with the Ministry of Financial Services, is constantly working to ensure we maintain strong and beneficial relationships with key international figures in the financial services industry,” Scott said. “It is important for us to keep reminding these stakeholders of the Cayman Islands’ role as a premier global financial hub and the ways in which we benefit developed and developing countries around the world. We are always grateful for the Cayman Islands Government’s support in these ventures.”

“The combined efforts of Cayman Finance, the Cayman Islands Government and our regulator, the Cayman Islands Monetary Authority, ensure that our financial services products and services are consistently delivered to meet or exceed our international clients’ expectations through excellence, innovation and balance,” Scott said. “We are extremely proud of the work that the Cayman Islands does both locally and worldwide, and will always seize the opportunity to spread our message around the globe.”

CIMA announces new appointments

July 11th, 2017

The Cayman Islands Monetary Authority (CIMA) has promoted two staff members to top positions within the organisation, as of 1 June 2017.

Suzanne Sadlier, who has been a reinsurance specialist at CIMA since joining the authority in April 2015, was named deputy head of the Insurance Supervision Division, and Judiann Myles, who had a three-year tenure as the deputy head of CIMA’s Policy and Development Division, was appointed deputy head of the Compliance Division.

“As the authority continues to highlight the quality of expertise amongst our employees, we are extremely pleased to fill these important top positions from within our organisation”, Cindy Scotland, CIMA managing director, said. “With a combined proven track record for successfully leading large-scale initiatives, experience in strategic planning and technical operations within financial regulation, each of the aforementioned appointments certainly add value to CIMA’s management team, and its overall structure,” she added.