(CNS) Business): Despite the efforts of Cayman Islands’ finance industry, with government and its lobbyists spending time and money trying to paint a picture of how it fits into the global economy and its high standard of regulation, another report on tax issues relating to US-based global corporations has painted Cayman as a notorious tax haven. Offshore Shell Games 2017, a report by the US PIRG and the Institute on Taxation and Economic Policy, outlined the extent to which Fortune 500 companies are using offshore financial centres and as a result legitimately avoiding taxes in the US on trillions of dollars of profit.
Responding to the article, Cayman Finance CEO Jude Scott repeated his message that Cayman is committed to global transparency and is a strong international partner.
“Reports such as this conveniently overlook how international finance centres (IFCs) like the Cayman Islands use their commitment to global standards for transparency and cross-border information sharing with law enforcement and tax authorities. Unfortunately, every jurisdiction is at risk from those who will attempt to get around the systematic safeguards, but the laws and regulations adopted by the Cayman Islands make us a strong international partner to address these concerns no matter where they originate,” he said.
Explaining Cayman’s role, Scott said it was a global financial hub “connecting law abiding users and providers of investment capital and financing around the world”, which provides value for the US, UK and other major economies because it pools capital and financing for things like infrastructure development.
“Cayman is a transparent jurisdiction due to our combination of a verified beneficial ownership regime, the adoption of more than twenty global financial standards and adherence to both US FATCA and the EU’s Common Reporting Standards,” Scott said.
“Cayman also is participating in the OECD’s BEPS initiative and will be introducing Country-by-Country Reporting by December 2017. We meet none of the descriptions used by entities such as the OECD or Transparency International to define a tax haven. In fact, our system purposefully lacks any laws or regulations like double taxation treaties or foreign incentives that support the shifting of tax base by foreign entities to avoid corporate taxes in their home jurisdictions,” he added.
The latest report focuses on the extent that Fortune 500 companies use offshore centres and what that means for tax collection on corporate profit. In the report the authors point to companies that don’t have an office in Cayman holding billions of dollars here.
Ugland House, the headquarters of Cayman’s largest law firm, Maples and Calder, is again singled out in the report as a “notable symbol of these excesses”. It is described as a modest five-storey office building which is the registered address for 18,857 companies.
“Simply by registering subsidiary companies in the Cayman Islands, US companies can use legal accounting gimmicks to make much of their US-earned profits appear to be earned in the Caymans and thus pay no taxes on those profits,” the report stated.