As published on caymannewsservice.com, Tuesday 10 November, 2020.
(CNS): Cayman Finance has proposed an alternative approach to the amendments government plans to make to several laws in order to address compliance issues regarding transparency of accounting records for offshore service providers. The list of bills stirred up controversy with stakeholders when they were circulated to industry players, raising alarm that they posed a threat to corporate service providers.
In October the Cayman Islands Company Managers Association submitted comment to government about the proposals, in which they said the proposed amendments were completely unnecessary and would lead to a loss of business. Some members were also worried that government might not listen to the industry’s concerns, regardless of the consultation.
Johann Moxam, Partner at Lainston International Management, a corporate service firm, described the consultation as a charade, despite the serious threat to the sector posed by the purposed legislative amendments.
The consultation had been due to close in October but was extended to last week. According to documents submitted on 6 November by Cayman Finance, the body representing the wider offshore industry, they too had serious concerns about the proposals. As a result the association came up with an alternative proposal.
The financial experts said it was possible to comply with the Global Forum’s recommendations for an effective system of oversight on accounting information with potentially less burden being imposed upon the jurisdiction and its service providers than the proposed amendments to eight pieces of key legislation.
Cayman Finance said the sector was worried that the government’s proposals, which they described as “out of proportion” as they stood, would place an unacceptable burden on corporate service providers, risk a loss of competitiveness for the jurisdiction at a time when it is dealing with a great deal of regulatory change, and that the vague language of the amendments would pose significant compliance problems.
The proposals were “overly burdensome, fraught with uncertainty and disproportionate”, Cayman Finance said, adding that there were ways to address the issue without forcing every offshore entity to have accounts held here.
Instead the association submitted a simpler proposal to include an obligation in all relevant laws for companies to “(a) keep proper books of account and (b) where books of account are maintained outside the Cayman Islands, comply with any request from the Tax Information Authority (TIA)”, with confirmations to be included in annual returns
Cayman Finance suggested an administrative fine and giving the registrar power to strike off entities that don’t comply. The organisation did not submit specific drafting suggestions but offered to give more details if the finance ministry, which was seeking the input, wanted.
“However, if the Ministry considers that the best way forward for the jurisdiction will be to require the maintenance of some kind of accounting information in the Cayman Islands, Cayman Finance would strongly suggest that further industry consultation take place in relation to the appropriate form and content of any such required information,” the association stated in its written submissions.