Cayman changes policy on tax matters

THE CAYMAN Islands has announced it has used a “unilateral mechanism” to change its tax information assistance policy towards a number of jurisdictions, including Ireland.

The announcement comes in the run up to the G20 summit in London on Thursday which is expected to discuss measures to blacklist so-called offshore islands and locations. The summit is causing considerable concern in the Cayman Islands.

British prime minister Gordon Brown said last week he believed “that we can, for the first time, agree the big changes necessary for co-ordinated action that will signal the beginning of the end for offshore tax havens and offshore centres”.

A spokesman for the Revenue said yesterday that the development came as a surprise. The Revenue had been in the process of negotiating a bilateral treaty with the Cayman Islands.

“It will be helpful to the Revenue in inquiries involving Irish taxpayers with money in the Caymans,” the spokesman said.

The Cayman Islands government said it had put in place “arrangements that provide access to comprehensive tax information assistance with 20 countries, including the majority of Cayman’s major trading partners.

“Ireland, Japan, the Netherlands and South Africa now join eight other countries afforded tax information assistance to OECD standards under a unilateral mechanism, which does not require a bilateral treaty.”

The unilateral mechanism, introduced in 2008, allows Cayman to “deliver on its commitment to transparency and exchange of information in tax matters”, the Cayman government said.

Both the McCracken and Moriarty tribunals, which investigated the financial affairs of the late former Taoiseach Charles Haughey, failed to get co-operation from the Cayman authorities a number of years ago. The islands have used strong banking secrecy laws to protect people to hide income there.

However, such attitudes have been coming under increasing pressure in recent years and that pressure has grown substantially as a result of the global economic downturn and the international banking crisis.

Last week, the Revenue Commissioners announced new treaties with Guernsey and Jersey and the Isle of Man has also negotiated information exchange agreements with Revenue.

The British authorities have announced a partial amnesty for people with accounts in Liechtenstein and say they will be pressing the banks there to close all accounts of British citizens who do not come forward.