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.