Switzerland to implement AEOI Agreement with Cayman

January 3rd, 2017

The Swiss Federal Department of Finance (FDF) has launched a consultation on the introduction of the automatic exchange of information (AEOI) in tax matters with a series of countries including the Cayman Islands.

Besides the Cayman Islands, the countries to implement AEOI agreements include such jurisdictions as the Seychelles, the British Virgin Islands, Bermuda, the Faroe Islands, Mexico , etc.

The consultation will run until March 15, 2017. The AEOI with these countries is to enter into force on January 1, 2018, with the first exchanges to take place in 2019.

Switzerland expects that extending the network of AEOI partner states will help strengthen the competitiveness, credibility, and integrity of Switzerland’s financial center.
Switzerland to implement AEOI Agreement with Cayman

The Swiss Federal Department of Finance (FDF) has launched a consultation on the introduction of the automatic exchange of information (AEOI) in tax matters with a series of countries including the Cayman Islands.

Besides the Cayman Islands, the countries to implement AEOI agreements include such jurisdictions as the Seychelles, the British Virgin Islands, Bermuda, the Faroe Islands, Mexico , etc.

The consultation will run until March 15, 2017. The AEOI with these countries is to enter into force on January 1, 2018, with the first exchanges to take place in 2019.

Switzerland expects that extending the network of AEOI partner states will help strengthen the competitiveness, credibility, and integrity of Switzerland’s financial center.

New Cayman finance bill proposes more reporting

December 27th, 2016

The Government of the Cayman Islands has gazetted a list of amendments to the Public Management and Finance Bill that covers important changes when it comes to the reporting of how government is spending public cash. The Public Management and Finance (Amendment) (No. 2) Bill, 2016 is expected to be debated in the Legislative Assembly when it meets again in January 2017 and the new law will see government departments reporting their financial circumstance to parliament on a quarterly basis.

The amendment bill is now open for public discussions. It is aimed to provide a clear and simple process for pre-election financial updates and government unaudited quarterly reports that can be presented to the LA and to streamline the provision of annual reports.

The bill covers changes to transactions where no appropriation is required for improving transparency, and the proposed bill aims at more clearly defining the functions of the minister of finance, the financial secretary, the chief officer of finance and the director of internal audit, chief financial officers, and other senior public officials involved in the financial aspects.

Finance Minister Marco Archer spoke recently about his desire to pay off more of government’s debt in addition to the regular payments being made. However, paying more off a debt would see Cayman lose control of its finances again, which Archer has said is a significant barrier to improving the governments financial situation.

Cayman Economy grows by 3%, surpassing predictions

December 20th, 2016

Statistics released by Cayman Islands Government indicates that the local economy grew by around 3% in the 1st 6 months of 2016, surpassing predictions and reflecting the best growth rate in the country since before the economic crisis.

The forecast GDP growth for 2016 has now been adjusted from the expected 2.1% forecast by the finance minister during the budget to 3% because of the improved performance in the 1st part of the year. The government purse is also fuller than expected as the stronger economy has boosted revenue by 9.7%.

According to the latest numbers from the Economics and Statistics Office, the Cayman Islands Government expects to end the fiscal year with a surplus of $127.5 million, which is 10.8% higher than the CI$115.1 million the administration achieved in 2015. The finance ministry has also been getting on top of the government’s debt, which at the end of June was down 3.7% from last year to CI$501.3 million.

Following the release of the figures, Finance and Economic Development Minister Marco Archer said: “I am pleased to note that growth in the first half of 2016 improved on the 1.3% growth for the same period in 2015”. He added that it also exceeds the initial GDP forecast for the year of 2.1%, and is the highest growth rate since 2007.

The main boost to the economy, however, may be bad news for the environment as it is based on a growth in construction, quarrying and consumption. The semi-annual growth was due in large part to an 11.4% growth in construction, while wholesale and retail trade grew by 7.6%.

Growth in the financial services sector, which still accounts for the bulk of Cayman’s earnings, was considerably more modest. Financing and insurance services grew by 3.6%, which the ESO said down to the domestic lending activity of commercial banks rather than the offshore industry. While visitor numbers are still growing, the hotel and restaurant sector declined by just over 1%.

The GDP estimate for 2015 shows that the local economy was where the growth was concentrated. “The 2.8% growth exceeded the 2% advance estimate for the year based on early indicators,” Archer said. “Moreover, it was broad-based as all sectors in the economy turned in positive growth rates. This augurs well for the increased diversification of our economic base.”

Cayman listed as 2nd worst tax haven

December 13th, 2016

The Cayman Islands has been listed as one of the worst corporate tax havens in the world in a new report examining the impact that tax-dodging corporations have on the world’s poorest people. Published by the international charity Oxfam, the report lists Cayman in second place behind Bermuda because of the zero-rated corporate income tax and what the charity said is a lack of cooperation with international efforts against tax avoidance.

But Oxfam stated in the report that there is a destructive race to the bottom on corporate tax.

Also, it said that the growth in the use of tax havens means countries are finding it harder and harder to tax income from capital. Government coffers are declining and the burden of tax has shifted toward poorer workers and small businesses and away from powerful conglomerates and the world’s high net worth individuals.

Oxfam names on-shore countries as well as offshore financial centres, such as Cayman and Bermuda, but the charity is calling on world governments and corporations to facilitate much more transparency over who owns what and who pays tax where on their earnings and profits. The charity also raised concerns that in the country-by-country reporting between government authorities the information is still not public. This means developing countries cannot access the data.

Responding to this latest critical report, Financial Services Minister Wayne Panton accused Oxfam of making errors on its list and of exploiting misinformed public opinion, as part of an agenda to influence the public policy of G20 countries.

Panton said that the report “may be detrimental to the overall shared goal of combating criminal behaviour and addressing income inequality”. He claimed that Oxfam’s overriding error is their failure to differentiate between capital flows and profit shifting.

To engage in profit shifting, a jurisdiction must attract significant multinational corporations, or MNCs, he explained. “Cayman does not have this type of business. We do, however, receive capital flows that are used to the benefit of other jurisdictions, via investment projects”.

Cayman Finance https://www.cayman.finance/, the local body representing the offshore sector, has described a recent Oxfam report on tax havens as “the same purposefully misleading rhetoric pretending to be research that Oxfam has published and republished for years”. Cayman Finance said the analysis was biased and “intentionally inaccurate and misleading information”, as it accused the global charity that has been helping the world’s poor and vulnerable people for well over 70 years of advancing an agenda and harming countries they do not ‘like’ in the process.

Cayman Finance CEO Jude Scott claimed that the Oxfam report was “alarmism” that was “unsupported by the facts”.

He said that international policymakers recognise the “vital role the Cayman Islands plays in the global economy”, as he advanced the idea that Cayman connects law-abiding users and providers of investment capital and financing around the world, which benefits both developed and developing countries.

“Oxfam continues to use a misleading and overly simplistic definition of what a tax haven is. Its assertion that a zero tax jurisdiction is a key criterion in defining a tax haven is simply not correct. Cayman Finance believes that any criteria used should be transparent, objective and meaningful,” Scott said. ‘Tax haven’ is a place providing shelter for illegal or inappropriate transactions and a jurisdiction that engages in practices that supports or conceals transactions relating to tax evasion, which is illegal. So, the Cayman Islands is not a ‘tax haven’, he said. “The Cayman Islands is an efficient and effective tax neutral jurisdiction that does not add additional taxes and has been recognised for decades as a strong partner in combatting global financial crime including money-laundering, terrorism financing, corruption and tax evasion. The Cayman Islands has gained the reputation of a transparent jurisdiction by meeting or exceeding globally accepted standards for transparency and cross border cooperation.” He said this jurisdiction provides a tax neutral platform that allows parties domiciled in countries that have differing laws, regulations, tax rules and customs to do business with each other.

Schwarzenegger to star at Cayman investment conference

November 23rd, 2016

Arnold Schwarzenegger will be visiting the Cayman Islands in February 2017 as the keynote speaker for the Cayman Alternative Investment Summit (CAIS).

The American-Austrian action movie star and former California governor, Schwarzenegger left politics in 2011 but he continues to be an advocate of sustainable energy and was a leading voice at the Paris climate conference last year.

When he comes to Cayman, Schwarzenegger will join what organisers of the CAIS”.

Other special guest speakers are Mark and Scott Kelly, twin astronauts who are helping NASA study the impact of long-duration space flight; George Whitesides, the CEO of Virgin Galactic, the world’s first commercial spaceline; Mike Abrashoff, a former Navy general famed for transforming the worst-performing ship in the Navy’s Pacific Fleet into the best-performing ship; and David McWilliams, a renowned Irish economist, writer, broadcaster and journalist.

Cayman to have another great year for tourists

November 20th, 2016

At the end of September almost 300,000 overnight guests had already visited Cayman this year, setting the tourism sector on track for another great year.

2015 was the best year since the Department of Tourism began keeping official records and this year is likely to come very close to those numbers. Speaking at the Cayman Islands Tourism Showcase 2016, Tourism Minister Moses Kirkconnell said that he believed the numbers in 2016 will exceed the 385,378 guests that came to Cayman Islands in 2015.

There were breaking arrivals for June and July, so Kirkconnell said the “tremendous growth” in the sector is continuing despite fierce competition. According to him, the government of the Cayman Islands had to keep the tourism momentum going as the economy is still heavily dependent on the sector, which provides some 12,000 jobs, or a quarter of the labour force.

The minister also spoke about the progress on the enhancement of the airport, which, in contrast to the cruise port, has much broader support across the entire community.

Tibbetts begins process to create utilities regulator

October 25th, 2016

The minister responsible for planning and public works began the process of dealing with a bundle of legislation in order to pave the way for the much-anticipated utilities commission.

The government hopes that this commission will not only act as the umbrella regulator for the technology, power, fuel and water sectors but also serve as a watchdog for consumer protection. The new commission had its genesis in broad public concerns, which were adopted by the government that the two bulk fuel suppliers in the Cayman Islands have not been transparent about their prices and that consumers are getting a bad deal. Now, the idea has broadened to create a new regulatory and competitive regime for all local utilities providers.

Planning, Lands, Agriculture, Housing and Infrastructure Minister Kurt Tibbetts, who has responsibility for all the utilities, presented three other bills alongside the Utilities Regulation and Competition Bill, which will begin the process. He stated that several more pieces of legislation regarding the water sector would be brought in January 2017.

Cayman on top of Offshore Merger deals again

October 21st, 2016

According to a report by a firm of international lawyers, Appleby, one third of all merger and acquisition deals in the offshore world in the first half of the year 2016 took place in the Cayman Islands.

Cayman retained its standing as the primary target of offshore transactions accounting for 40% of the value of that business. This was released by Appleby in its latest edition of Offshore-i, a report that analyses data on the activity in offshore financial centres.

While figures for the 1st 6 months of 2016 were down generally on what the lawyers said were “record-setting” figures in 2015 and both the number and value of offshore M&A deals fell, the Cayman Islands held on to the lion’s share of the deal volume and value.

Also, it was stated that the Cayman Islands was also home to 4 of the 10 biggest deals between the beginning of January and the end of June, including 3 in the technology sector, which enjoyed a particularly robust start to the year.

In the 1st 6 months of the year, the report claims, Cayman-incorporated companies were the target in 459 transactions worth a combined USD 41 billion. The value represented more than twice the amount of the next closest jurisdiction, the British Virgin Islands, while Hong Kong was second to Cayman in terms of deal volume with 263 transactions.

The largest deal targeting a Cayman company was the USD 4.5 billion investment in Cayman-incorporated software publisher Xiaoju Kuaizhi by a consortium including China Merchants Bank and other investors. Other significant technology deals in Cayman involved a USD 2 billion funding round for Cayman-incorporated Uber China and a USD 2 billion share buyback by Alibaba Group Holding Ltd.

While the 1st 6 months of the year 2016 saw a slowdown in completed IPOs across jurisdictions, a more positive story emerges when looking at future IPOs announced during this time period, the heavy majority of which involved a Cayman-registered company. Cayman was responsible for 102 of the 115 announced IPOs.

Despite the challenges faced by many offshore jurisdictions in the world at present, the offshore region is still ranked 6th in the world by deal volume and 4th for value activity. As the lawyers report stated, average deal size remains strong, and continuing from 2015, offshore still has the highest average deal size of any region worldwide.

Lawyers’ legislation delayed as small firms need time

October 19th, 2016

The minister of financial services has postponed the debate on the still controversial Legal Practitioners bill until the next meeting of the Legislative Assembly. This was because of a request by some small firms and sole practitioners as they want more time to submit suggestions that specifically impact their sector.

Wayne Panton was hoping to steer the legislation through during this current meeting after 15 years of wrangling. So, he said it was a risk to delay passage when the jurisdiction is to face the Financial Action Task Force (FATF) review in 2017. However, he noted that if a short delay improves matters, he believed it was a risk worth taking to balance the interests of sole practitioners and the need for the law now.

Cayman captives boosted by non-traditional risk

September 22nd, 2016

According to the Cayman Islands Monetary Authority (CIMA), 2016 has been a very active year for new captive insurance formations, with 23 new licences granted over the 1st 6 months of the year. This number exceeded the issuance of licences in the whole of 2015.

Head of Insurance Supervision at CIMA, Ruwan Jayasekera, said that historically, November and December are the busiest months in terms of new captive formations, “and if the same applies to 2016, the year will be another phenomenal year for the jurisdiction in terms of new captive/(re)insurance company formations”.

He added: “CIMA is seeing a shifting trend in new captive/(re)insurance company formations, with more and more companies being formed to assume unrelated and non-traditional risks”. Changes made to the main insurance law, supporting regulations and the regulatory framework within the last five years to accommodate sophistication and innovation have had a positive impact on the insurance industry, with insurance groups, intermediaries and hedge-funds in particular choosing Cayman to house their (re)insurance subsidiaries.”