Archive for March, 2010

Cayman furthers tax info exchange

Tuesday, March 30th, 2010

The government of the Cayman Islands has committed to the signing of further 16 Tax Information Exchange Agreements (TIEAs) with jurisdictions of economic significance. This is expected to be done in additional to the 14 TIEAs that have already been concluded.

According to the government, this announcement demonstrates Cayman’s commitment to transparency and the exchange of tax information in cooperation with 3rd country tax authorities, as regards the fight against tax evasion.

The Cayman Islands government announced that it has agreed to sign an agreement with Australia on March 30. Also, it is awaiting signing dates for the agreements with Aruba, Canada, Germany, Italy, Mexico and South Africa. In addition, negotiations with 9 additional OECD/G-20 countries are in various stages.

According to Caymans Islands Premier, McKeeva Bush, the jurisdiction looks forward to continuing this engagement. He said that Cayman is doing its part “in demonstrating the effectiveness of our transparency regimes and our expertise as a jurisdiction”.

Cayman Islands to review Tax Transparency

Friday, March 26th, 2010

The 1st 18 jurisdictions that take part in the Global Forum on Transparency and Exchange of Information have been included in the 1st phase of a peer review process.

The Cayman Islands was in this group of countries. Besides Cayman, these the 1st 18 countries are Australia, Barbados, Bermuda, Botswana, Canada, Denmark, Germany, India, Ireland, Jamaica, Jersey, Mauritius, Monaco, Norway, Panama, Qatar, and Trinidad and Tobago.

The reviews are a 1st step in a 3-year process that was approved by the Global Forum in February 2010. The Global Forum has published 3 key documents – The Terms of Reference explaining the information exchange standard countries must meet; The Methodology for the conduct of the reviews; and The Assessment criteria explaining how countries will be rated – in addition to a complete schedule of forthcoming reviews.

The Global Forum brings together 91 countries that include both OECD and non-OECD countries.

Cayman is the 2nd globally in Captive Insurance

Tuesday, March 23rd, 2010

According to a new survey from weekly trade publication Business Insurance, the Cayman Islands is the 2nd jurisdiction in captive insurance sector in the world.

The Business Insurance ranks jurisdictions basing its top on the number of licensed captives at the end of 2009. According to the survey, the Cayman Islands is 2nd only to Bermuda.

Bermuda (885) is leading the way, followed by the Cayman Islands (780). Vermont (560) takes the 3rd position followed by Guernsey (355), the British Virgin Islands (285), Luxembourg (251), the Isle of Man (145), Dublin (114), Switzerland (42), Gibraltar (17), Malta (9) and Jersey (3).

Miller Recommendations welcomed by Cayman

Thursday, March 18th, 2010

It was discussed that the Teather Report rejected the recommendation made by the UK government that the Cayman Islands should introduce direct taxation in order to solve its financial difficulties.

Recently, the government of the Cayman Islands has welcomed the conclusions of the Miller Report. Particularly, its main recommendation was that the introduction of direct taxation in the jurisdiction should be avoided.

In 2009, the Miller Commission was created by the Cayman government in response to the UK government’s concerns that the global economic and financial crisis has damaged the territory’s long-term economic and fiscal health.

In a statement, Cayman Premier, McKeeva Bush, commented on the content of the Miller report:
“On the first recommendation, that there should be no introduction of direct taxation in the Cayman Islands, it would be no surprise for you to hear that we agree with this general conclusion and believe that ideally new revenue measures will need to be kept at a minimum for the short- to medium-term. However, we are committed to examining ways to broadening the revenue base and we have given that commitment to the UK. We received no indications during the meetings that the FCO (UK Foreign and Commonwealth Office) will be pushing for direct taxes, although this is something that they would like for us to continue to consider in our efforts to broaden the revenue base.”

Also, Bush said that the government agreed in principle with most of the report’s other recommendations that include the privatization of government assets, restructuring government departments to cut costs, reducing civil service pensions, ensuring that civil servants contribute towards their healthcare costs, and cutting down top government salaries.

3rd Quarter 2009 Economic Report released in Cayman

Tuesday, March 9th, 2010

On March 3, 2010, the Cayman Islands Economics and Statistics Office released the 2009 Third Quarter Economic Report that shows further deterioration in the jurisdiction’s economy in all but the banking sector.

The report compiles all available economic indicators as at end of September 2009 and provides their percentage change since end of September 2008.

The significant change outlined in the report is annualized gross domestic product (GDP). According to key indicators, in the 1st 3 quarters of 2009, GDP decreased by 3.6%.
Significant declines are as follows:
• merchandise imports fell by 18% largely due to reductions in building materials, transport and transport-related items, and manufactured items;
• work permits decreased by 9.5%;
• new company registrations plummeted by 39.2%;
• mutual fund registrations saw a decline of 4.4% to total 9,838;
• the number of total visitor arrivals fell by 3.8%, due to a 13.1% slide in air arrivals and a 1.9% in cruise passengers;
• the value of building permits plummeted by 28.5%;
• the property market suffered a steep decline as the value of property transfers fell by 40.0%.

On the other hand, there were strong increases in domestic credit by commercial banks and water production. Domestic credit by commercial banks grew by 17.1%, while water production
grew by 4.6%.

Report rejects Direct Taxation in Cayman

Thursday, March 4th, 2010

An academic report that examined the fiscal challenges facing the Cayman Islands has rejected the recommendation made by the UK government. According to the recommendation, the Cayman Islands should introduce direct taxation in order to solve its financial difficulties.

The report was compiled by Richard Teather, a senior lecturer in taxation. Noting the effects of historically high taxation on the UK economy, the author of the report has urged the Cayman government to retain its low-tax approach and instead target public spending.

In accordance with the report, the introduction of direct taxation without ensuring public sector expenditure is balanced in relation to then jurisdiction’s population of around 50 000 people. The report notes that Cayman has solely relied on indirect taxation throughout its 200-year history.

The report was commissioned by Cayman Finance – formerly The Cayman Islands Financial Services Association (CIFSA).

The key points in the Teather Report are as follows:
– high taxes damage economies;
– the United Kingdom and United States benefited from lower taxes through the Thatcher/Reagan reforms of the 1980s;
– New Zealand and Ireland thrived under low taxes in the 1990s.

The Teather report rules out debt finance as an ongoing solution because, in the long term, this would be highly damaging to the jurisdiction’s reputation as a place to do business. It also highlights that government spending in Cayman is “totally out of line with its peers, having far higher levels of public spending than any other comparable jurisdiction.” According to statistics n the report show, the Cayman Islands has more than double the government spending per head of population than the average level for comparable countries.