The Cayman Islands is proposing a new law called:
A LAW TO PROVIDE FOR THE ESTABLISHMENT AND OPERATION OF SPECIAL ECONOMIC ZONES IN RESPECT OF CERTAIN TYPES OF BUSINESSES; AND TO PROVIDE FOR INCIDENTAL AND CONNECTED PURPOSES
They know how to grab attention. don't they?
Except, perhaps that's the last thing they want to do. As they say:
This Bill seeks to provide for the establishment and operation of special economic zones in respect of certain types of businesses.
And as they also say:
Clause 6 empowers the Authority to facilitate the procurement, management, reclamation and disposal of land and other property for the purpose of a special economic zone; the carrying out of development works and other building operations in, on or in respect of a special economic zone; and the preservation, maintenance, regulation, management and improvement of a special economic zone and to provide additional facilities to it.
So we know that the zones are to be in Cayman.
Despite which they say:
Clause 7 provides for the duty of confidentiality on the part of members of the Authority.
So telling secrets will as usual be important in Cayman. Which may be vital because:
Clause 11 provides for a special economic zone to be deemed to be outside of the Islands for the purposes of Parts VII and VIIIA and section 201(2)(f) of the Companies Law which deals with exempted companies, sections 4(1) and 9(1)(f) of the Exempted Limited Partnership Law (which respectively deal with the constitution and registration of exempted limited partnerships) and clause 18 of the legislation (which prohibits the carrying on of trade in the Islands by a special economic zone enterprise and provides for the carrying on of business by a special economic zone enterprise mainly outside of the Islands).
Not let me just unpack that.
What this law does is provide that Cayman will create new areas in the somewhat limited land space of the island where under terms of some secrecy companies will operate but where, despite that fact, they will be deemed to be 'somewhere else'.
This is classic tax haven stuff. I explained it all some time ago, here. But it's astonishing to see Cayman being quite so blatant about it still.
And they tell us tax havens have changed.
Now pull the other one.
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Dear Richard, as someone actively involved in the above project, I would like to highlight its the reverse. Cayman Enterprise City is seeking to focus on substance over form and require all companies in the Zone to have a substantial presence. Indeed, it is designed to address the very issue you raise. Philip
That’s just not possible – I simply don’t believe you or the legislation would not say what it does
Presence is one thing – the point is there is then a pretence of absence
That’s the sort of myopic belief that fuels all failures of corporate governance, ethics and global financial failure
The phrase “layered mendacity” springs to mind, Philip.
The wikipedia item “Antigonish (poem)” comes to mind, “I met a man who was’t there….”
Once the (so-called) governments of the Isle of Man, Jersey and Guernsey read about this they will be falling over themselves to launch their own editions of this dodge.
Being-there-whilst-not-being-there is a classic tax pigsty wheeze.
As for the limited availability of space (to procure manage, reclaim and dispose of property for the purpose of creating a “special economic zone”) this will be no problem – islanders (that’s the genuine, decent ones) can be simply rehoused in tents; nothing must stand in the way of the Holy Grail of the tax scam industry…
Until such time as the UK negotiates a DTA with ‘Limbo;’, maybe this will solve all the tax problems.
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[…] Richard Murphy has also analysed the new legislation, here. […]