Originally Published in the Cayman Updater –
Cayman's commitment to international tax transparency
standards has been recognised by the Organisation for Economic
Co-Operation and Development ("OECD") which has moved the
jurisdiction onto the OECD's "White List" of
jurisdictions that are compliant with international tax
transparency standards. Cayman signed its twelfth bilateral Tax
Information Exchange Agreement ("TIEA") with New Zealand
on 13 August 2009 and so now meets the OECD's minimum
requirement set in April this year for a jurisdiction to prove that
it is committed to and compliant with international tax
It is expected that Cayman will soon have many more TIEAs in
place as it has unilateral mechanism agreements with Japan,
Germany, South Africa, Austria, Belgium, Czech Republic,
Switzerland, Luxembourg and the Slovak Republic. The unilateral
agreements have been hailed by the OECD as being both
"imaginative and innovative", but a decision on the
formal acceptability to the OECD of this mechanism is not expected
prior to the OECD's Global Tax Forum meeting in Mexico on 1st
and 2nd September 2009.
The unilateral mechanism agreements were introduced by Cayman in
late 2008 in an effort to overcome delays in putting bilateral
agreements in place. The basis of the unilateral agreement is
Cayman's commitment to disclose information to any listed
country on the terms of the model TIEA used for the bilateral
agreements. Should the unilateral mechanisms be acceptable to the
OECD, this would bring Cayman's TIEA count to 21. In addition,
negotiations for further bilateral agreements are in advanced
stages with Italy, Mexico, Germany, France, Australia, Portugal and
The Cayman Government is confident that the jurisdiction is well
placed to ensure the smooth operation of the TIEAs due to the fact
that Cayman already has a fullystaffed and fully-operational Tax
Information Authority that was established shortly after Cayman
entered into its first TIEA with the US in 2001 (which was the
first TIEA entered into by any offshore jurisdiction) and has an
excellent track record of co-operation with the US and also with
the 27 EU States pursuant to its tax reporting obligations under
the European Union Savings Directive.
Jeffrey Owens, Director of the OECD's Centre for Tax Policy
and Administration has had welcoming words for Cayman in the recent
past: "we are hearing from certain jurisdictions (for example
the Caymans) that they want to build a network of tax transparency
agreements, and this is the type of commitment we wish to
see". The admission of Cayman to the White List is a welcome
recognition that it meets the highest international standards on
Cayman gains IOSCO membership
The Cayman Islands Monetary Authority (CIMA) became an ordinary
(full) member of the International Organisation of Securities
Commissions (IOSCO) at the 34th annual conference held in Tel Aviv,
Israel on 10 June 2009. The granting of membership came on the
heels of the signing of a Multilateral Memorandum of Understanding
(MMOU) that commits CIMA to co-operation and exchange of
information with international regulators. IOSCO is the
organisation that has largely set the international standards and
practices for securities regulation and has as a key objective
"to reduce global systemic risk, protect investors and ensure
fair and efficient securities markets".
CIMA's acceptance into this group has been longawaited. As a
regulator of the highest international standards, it has, for a
number of years, been pursuing this recognition by IOSCO based on a
"level playing field" and has been actively represented
on the IOSCO committee looking at this issue.
This membership is important to Cayman's financial services
industry as it opens doors to some international markets that were
previously closed to direct investment by Cayman funds. For
example, it is expected that Cayman funds which invest in India
should now have the option of being registered as a foreign
institutional investor ('FII") with the Securities and
Exchange Board of India ("SEBI") rather than investing
through intermediary funds based in another jurisdiction or through
participatory notes issued by other FIIs.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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