Archive for June, 2013

Cayman issues Action Plan on Beneficial Ownership

Thursday, June 27th, 2013

In order to improve transparency of the ownership and control of companies so that to ensure a level playing field all over the world, the Cayman Islands is committed to continue working with other nations towards the full implementation of the revised Financial Action Task Force on Money Laundering (FATF) standards. This means good governance as well as a means tackling various illicit activities.

Collection and maintenance of beneficial ownership information by corporate service providers and trustees of express trusts has been legally required in the Cayman Islands for more than 10 years. Trust and corporate service providers are obliged on to collect, update and retain such data, and this requirement is enforced through a regime that mandates a licensing process for trust and corporate service and an ongoing program of supervision and enforcement action that involves onsite regulatory inspections.

Cayman supports the high standards set by the revised FATF recommendations, including recommendations 24 and 25, and is committed to continue making progress towards the full implementation of these standards by undertaking the relevant actions.

UK Company under fire over avoiding tax using Cayman

Tuesday, June 18th, 2013

The largest water company in the United Kingdom, Thames Water, has come under fire after explaining that its taxable profits have been “substantially reduced” by capital allowances. As a result, the company did not pay corporation tax on GBP 145 million pre-tax profit in 2012.

The company’s accounts include interest paid on loans from a Cayman Islands subsidiary. Then accounts of Thames Water were published as the head of water industry regulator Ofwat complained of “morally questionable” financial arrangements in the industry.

The company explained: “HMRC’s capital allowance regime permits companies to delay the payment of corporation tax, not avoid it, by providing accelerated tax relief for capital investment.” It goes on to explain that it has invested GBP 1 billion each year in assets, with the result that it currently has a deferred tax liability of GBP 961.2 million. The review adds in the past year Thames Water has paid GBP 150 million in other taxes, and that expenditure with suppliers and contractors “generates substantial additional tax revenues in the wider economy.”

However, Simon Hughes MP, Deputy Leader of the Coalition Government’s Liberal Democrat Party, has called for the Treasury, the National Audit Office, and the regulator to investigate, and he noted that bills to consumers have increased by 7%. In 2012, Hughes claimed that his office and a newspaper had uncovered corporate misbehavior in relation to the sector’s tax arrangements.

Thames Water has denied that subsidiaries in the Cayman Islands are a tax-avoidance measure.

The company’s finance director said that subsidiaries in the Cayman Islands are needed to comply with UK company law requirements for the acquisition financing structure.

Cayman is ready for Multilateral Convention

Thursday, June 13th, 2013

On June 10, 2013, the Government of the Cayman Islands announced that it is prepared to commit to the Convention on Mutual Administrative Assistance in Tax Matters.

It was also announced that it the government accepted invitations from UK Prime Minister David Cameron to attend two events on June 15, immediately prior to the G8 Meeting, which will be held in Ireland on June 17-18.

The Convention on Mutual Administrative Assistance in Tax Matters is an OECD/Council of Europe multilateral agreement. It is aimed to fight tax evasion and aggressive tax avoidance by means of promoting cooperation among jurisdictions for the exchange of information among relevant authorities for tax and transparency purposes.

Premier Alden McLaughlin said: “We are satisfied that the extension of the convention to our Islands will be done in accordance with the UK’s recognition of Cayman’s fiscal autonomy, and the well-established principle that countries have the prerogative to set their own tax rates”.

Reinsurer Southport welcomed in Cayman Islands

Wednesday, June 5th, 2013

The reinsurance subsidiary of New York City-based private equity firm Southport Lane, Southport Re (Cayman), Ltd., has become the 1st insurer in the Cayman Islands to take advantage of the jurisdiction’s recently amended Insurance Law.

Southport Re recently migrated from Cayman’s Class B captive license to a Class D open-market reinsurer license. This category was created by a legal amendment to the Insurance Law, passed in November 2012, with a view to establish a conducive regime for commercial reinsurers if they have a physical presence in the Cayman Islands.

The Director of the Cayman Islands Monetary Authority (CIMA), Cindy Scotland explained that the Class D open-market reinsurer license had been created in order to establish a different regulatory regime for captives and reinsurers. The amended Insurance Law enhances Cayman’s capability to effectively regulate the risks inherent to different licensees in the insurance market.

Welcoming Southport Re’s relocation to Cayman, as the island’s 2nd reinsurer to establish a physical presence, Dr Dax Basdeo, Chief Officer in the Ministry for Financial Services said: “Southport Re is a significant addition to our financial services community. Southport Re’s decision to migrate from a Class B to a Class D insurer underscores our strength and competitiveness in the reinsurance sector.”

Glenn Weber, CEO of Southport Re, said that the firm was happy to be the 1st Cayman insurer to receive the new classification.

US Companies pay 25% Tax Rate Abroad, including Cayman

Saturday, June 1st, 2013

The Tax Foundation (TF) has analyzed that, according to Internal Revenue Service (IRS) data, United States multinational corporations paid an average effective rate of 25% in foreign income taxes in 2009.

The TF found that the largest concentration of foreign earnings for US multinationals was in the European Union, at USD 164.5 billion, on which they paid nearly USD 38 billion in income taxes at an average effective tax rate of 24%.

The 2nd largest concentration of taxable earnings was in Asia at USD 60.8 billion, where US firms paid more than USD 18 billion at an average effective tax rate of 31%.

With regard to particular countries, there were two so-called tax havens in the list – the Cayman Islands, USD 9.1 billion, and Bermuda, with USD 25.3 billion in income. and within that list. In the Cayman Islands, US multinationals paid average effective tax rate of 20.9%.