08/06/21

CAYMAN ISLANDS: CIG appears unfazed by G7 tax deal.

As published on caymannewsservice.com, Monday 7 June, 2021.

(CNS): The Cayman Islands Government appeared unfazed Monday when it responded to the weekend reports that the G7 wealthy nations have agreed a deal to establish a minimum global corporation tax of at least 15% for multinational companies that currently try to steer profits through countries with low or no tax rates.

Aimed at tech giants such as Google, Facebook and Amazon, the finance ministers agreed during the meeting in London to take on tax avoidance by some of the world’s richest companies by creating both a flat world tax rate to prevent them from chasing the lowest tax deals and to make them pay their taxes where they make their profit. Responding to the news, the Cayman Islands Ministry of Financial Services said very little.

“The G7 announcement, which would predominately affect multinational enterprises, aligns with the Cayman Islands’ overall position that taxes should be paid where they are rightfully owed. While the Cayman Islands’ primary business is investment funds, which are tax neutral under international tax rules, we continue to support international tax compliance by adhering to international tax standards,” unnamed officials said in a very short statement from the ministry.

Cayman has no corporation tax at all and tax matters are a devolved issue. There has been no comment so far from the UK government on how this agreement would impact its overseas territories.

Neither Cayman Finance nor any of the other associations in Cayman representing the financial sector have commented on the proposal, which was not unexpected. The deal announced on Saturday is between the US, the UK, France, Germany, Canada, Italy and Japan but they are likely to put pressure on other countries to get on board ahead of the G20 meeting next month. The agreement will be discussed in detail at a meeting of the G20 finance ministers in Venice, where countries such as Brazil, China and Russia will be in attendance.

Chancellor of the Exchequer Rishi Sunak, who hosted the summit, said the agreement would make the global tax system “fit for the global digital age”.

Several non-profits that campaign against offshore financial centres said that the rate was too low and would not stop what they called tax havens from operating. “It’s absurd for the G7 to claim it is ‘overhauling’ a broken global tax system by setting up a global minimum corporate tax rate that is similar to the soft rates charged by tax havens like Ireland, Switzerland and Singapore,” said Oxfam’s executive director Gabriela Bucher in a statement. “They are setting the bar so low that companies can just step over it.”