BBC World Service - Business - Cayman Islands says ‘not a tax haven’.
I am afraid rather typical BBC news reporting bia here.
When it comes to tax the BBC is horribly business biased.
And here we have a sentence or two saying Cayman is a tax haven and a six minute response.
I think that qualifies as bias.
The Guardian has reported the new Cayman double tax treaty, saying:
[The UK has] signed an agreement with .. the Cayman Islands, to enable the Treasury to demand information from the tax haven.
Critics of the government’s attempts to rein in tax havens said the Caymans agreement failed in its central purpose and set a precedent that other low-tax countries would want to follow.
The agreement with Cayman Islands is one of 113 double-taxation agreements that the UK has in force. The new one allows for an exchange of information about tax between the Cayman Islands and the UK. Timms said it included "unprecedented" provisions for exchanging information.
An upcoming code of practice for banks is expected to crack down on the use of tax havens by major banking groups. Timms said the code – originally slated for the budget – would be published "shortly".
The Liberal Democrat Treasury spokesman, Lord Oakeshott, said: "There is nothing in this feeble treaty that means any person or company is going to pay more tax. The Caymans is a zero-tax nation and this agreement isn’t going to change that. For Gordon Brown to trumpet his clampdown at the G20 and then sign bits of worthless paper is a disgrace."
Timms insisted this was not the case. "The game is up. People are realising that if they want to be part of the global economy they have to be willing to exchange information on tax."
I made my position clear on this yesterday and the Guardian quoted me in another part of the article referred to.
But I’m now wondering if Timms knows something that I don’t: that a DTA was needed with Cayman because of the massive use of it by UK banks, and that this dovetails with the Banking Code, on which I know work is continuing apace, but which i have not as yet seen. That’s my best hope. Otherwise I stick with Matthew Oakeshott’s opinion.
The standard OECD Tax Information Exchange Agreement includes this clause in Article 5:
4. Each Contracting Party shall ensure that its competent authorities for the purposes specified in Article 1 of the Agreement, have the authority to obtain and provide upon request:
a) information held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominees and trustees;
b) information regarding the ownership of companies, partnerships, trusts, foundations, “Anstalten” and other persons, including, within the constraints of Article 2, ownership information on all such persons in an ownership chain; in the case of trusts, information on settlors, trustees and beneficiaries; and in the case of foundations, information on founders, members of the foundation council and beneficiaries. Further, this Agreement does not create an obligation on the Contracting Parties to obtain or provide ownership information with respect to publicly traded companies or public collective investment funds or schemes unless such information can be obtained without giving rise to disproportionate difficulties.
But the UK can’t secure the data required by para (b).
It’s about time we could. Starting now.
We should be hanging our heads in shame. So should the USA – because I don’t believe this is possible in Delaware.
It’s time to get acts together. Cayman has, I am pretty sure, rumbled this. And as a result are going to get away with a DTA that is almost meaningless.
Signed today – and slipped out on HMRC’s web site without a press release (I wonder why?) is a double tax agreement (yes, I mean that – a DTA, not a Tax Information Exchange Agreement) with the Cayman islands.
It’s available here.
It’s not, I hasten to add a full blown DTA.
But then, it’s not a full blown TIEA either.
In fact the extraordinary thing is that the information exchange clause is far less onerous than a TIEA. So, for example, there is no reference to the need for the parties to be able to prove beneficial ownership of trusts, companies and other arrangements in their territories, which i TIEA should require.
For all practical purposes this renders the thing (let’s call it a ‘thing’ because there appears no proper name as yet for such a botch) pretty close to useless, and certainly of less use than the already near useless TIEAs.
The real question is – who asked for the downgrade on this point – the UK or Cayman? The former will have at least as many problems as the latter in complying.
Either way this is a massive embarrassment to the UK – and no way for Gordon brown to pursue his campaign on tax havens.
The Caymanian Compass has published an article under the above title. It was written by Anthony Travers of the Cayman Islands Financial Services Authority, who says (shortened a little):
As those who reside and work in Cayman know, our nation has been at the centre of a recent debate regarding the financial practices of jurisdictions that are so–called tax havens.
One unfortunate outcome of this debate is that the reputation of the Cayman Islands is being deliberately tarnished by writers and politicians who continue to falsely refer to our nation as a tax haven.
As our laws and treaties make clear, the Cayman Islands are not a tax haven.
The Cayman Islands financial laws do not permit tax evasion.
In fact, our banking system operates under full transparency – we have comprehensive tax information agreements and treaties in place with both the US (Tax Information Exchange Agreement), the 27 European Union jurisdictions (the European Union Savings Directive) and 20 other jurisdictions pursuant to OECD form bilateral and unilateral tax information treaties that prevent tax evasion.
[R]ecent articles … have sought to adversely tarnish the reputation of the Cayman Islands . As I clearly describe above, nothing could further from the truth.
The concept of truth would appear to be flexible.
Cayman is beyond doubt a secrecy jurisdiction. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction. They do in addition create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so. That is a remarkably good description of the ‘tax neutral’ (call it no tax in ordinary plain English) status of Cayman.
And this ‘totally transparent’ Cayman does of course have banking secrecy, no effective disclosure of any corporate information and a trusts regime, including STAR trusts that many outside Cayman think highly abusive, and not even trusts at all.
As for those Information Exchange Agreements, Mr Travers fails to note most relate to incredibly limited data for European Union Savings Tax Directive purposes alone and don’t qualify for OECD purposes.
So please Mr Travers, why not use international standards of truth, not just those generated in Cayman, because I do really find it very hard to recognise your version inherent in this article?
John Maples MP is in the news. As the Telegraph reports:
In a letter to the fees office in March 2006, Mr Maples, a senior figure within the Tory party who was first elected as an MP in 1983, wrote: “There is an unclaimed balance on my ACA for the current year of £1,364.65 and I attach a form claiming this amount.” He was paid despite failing to submit receipts for these “expenses”. A month later, he wrote again with a list of his anticipated costs for the coming year, adding: “I hope it will therefore be in order for me to claim the maximum of £1,835 p.m without submitting details on each occasion.”
The records also show that the MP regularly submitted claims under his ACA for £260 a month for “utilities”. When told by the fees office that all expenses above a threshold of £250 needed to be accompanied by receipts, Mr Maples began submitting claims for utilities of £240 a month.
But then, Mr Maples may be a man used to finding opportunities for tax free income. He gave his name to the firm of Maples and Calder, of which the Cayman News Service reports:
Maples and Calder, established in Cayman in 1967, is an international law firm specializing in international and offshore law. It is headquartered at Ugland House, which hit the international headlines in 2007 when US Senator Carl Levin announced that there were 12,748 companies registered there. The firm has offices in seven offshore jurisdictions, including Cayman where it employs 102 lawyers; 26 are said to be Caymanian and of those 10 are partners.
Cayman NetNews confirms the link.
Funnily despite Maples and Calder being the biggest firm in Cayman, and despite it having been established by him at the tender age of 24 it appears to get no mention in the biography on his own web site. It also misses Wikipedia by, although not on the Maples and Calder entry.
It might be the case John Maples may have had little to do with this firm for many years, but it’s clear he remains a friend of Cayman (see the Cayman NewNews link).
I ask a simple question though. Is a person who did so much as a consequence of his actions in Cayman the right person to be in the UK parliament? After all Wikipedia says of this firm when he was still with it:
The firm was founded in the early 1960s (the exact timing depends upon which event is used to determine the founding date), just in time to ride the spectacular wave of growth in Cayman’s offshore financial sector which was precipitated by the independence of the Bahamas in the 1960s. Jim MacDonald and the then-financial secretary of the Cayman Islands, Vasel Johnson, created much of the Caymanian offshore legislation which attracted the international business.
Jim MacDonald was Maples’ partner in Maples and Calder.
As such Maples seems to have at least some responsibility for creating the secrecy jurisdiction of Cayman. As secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so, it might be argued he has a lot to answer for.
At the very least he should update his biography so that people are aware of where he worked as a lawyer. It is simply airbrushed out in almost all written about him, for example on the Conservative’s’ own web page.
Which raises another question. Why would you do that if you were proud of what you’d done?
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