Cayman Islands Premier Alden McLaughlin said Saturday that the UK will sign, on behalf of its overseas territories, a multilateral tax information exchange convention this week during the Group of Eight meeting in Northern Ireland.
However, as far as Mr. McLaughlin is concerned the Multilateral Convention on Mutual Administrative Assistance on Tax Matters won’t require Cayman to do too much differently.
The convention is a multilateral agreement developed by the Organisation for Economic Cooperation and Development and the Council of Europe to combat tax evasion and aggressive tax avoidance. It provides for all possible forms of administrative cooperation between states in the assessment and collection of taxes.
In contrast to the 31 bilateral OECD tax information exchange agreements signed by the Cayman Islands, the convention can form the basis for any multilateral form of administrative cooperation between states in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion.
“It’s stuff that we’re already doing, mainly,” Mr. McLaughlin said Saturday on the telephone from London. “It’s going to require multilateral agreements with other countries. All of us have got the ability to insert reservations in whatever agreements we reach and we get to negotiate each of the individual agreements with each country.”
Mr. McLaughlin and other overseas territories leaders met with UK Prime Minister David Cameron for about an hour Saturday, following celebrations of the Queen’s birthday on Downing Street. He said the majority of the meeting concerned the convention treaty, which Mr. Cameron was keen to get the territories to agree to in the run up to the G-8 summit.
“All of the OTs and crown dependencies have agreed now,” Mr. McLaughlin said, adding that dozens of countries have already signed up to the convention.
“The thing that we pressed really hard about ... is to remind him that Cayman has been at the forefront of the advances in transparency to tax matters for really a long time,” the premier said adding that the territory’s requirements to keep careful records of beneficial ownership of companies have been in place for years.
“It’s harder to open a company in Cayman than it is in London and in many places around the world because of the level of disclosure that’s required.”
McKeeva Bush, the former premier and now-opposition leader, expressed doubts about the convention last week and the effects it could have on Cayman’s financial services industry.
“If we lose [that industry], what are we going to replace it with?” Mr. Bush asked. “What is Cayman getting out of it? This certainly doesn’t sound like it is going to help our industry.”
Gonzalo Jalles, CEO of Cayman Finance, said last week that the organisation representing the financial services industry in the Cayman Islands is supportive of government’s intention to sign up to the convention and agrees with the concept of automatic exchange of tax information.
Mr. Jalles stressed that the convention is a framework which will need to be followed by bilateral agreements with the different countries. He said Cayman Finance does not have an issue with the principle of one government assisting another in enforcing their laws.