Media Response to ABC News: 'Romney Parks Millions in Cayman Islands'
Published 20th January 2012, 10:33am
- Information Exchange:
Contrary to the ABC News report, the Cayman Islands is not a secrecy jurisdiction that facilitates the avoidance or evasion of taxes by US or other persons. Although the Cayman Islands does not itself impose income taxes, it shares financial and other confidential information with the IRS and other US federal agencies through various agreements with the US Government. That includes information requested for purposes of enforcing US income tax laws.
However, as in the US, private information is generally protected from public disclosure because such disclosure is not for law enforcement purposes and the information could be used for improper or harmful purposes. The registration of companies in the Cayman Islands and arrangements for receipt of mail at their registered addresses are essentially the same as arrangements for companies registered in Delaware and elsewhere in the US.
Furthermore, despite the unfounded allegations of improper secrecy made in its report, ABC News was able to verify the existence of various investment funds through documents which are publicly available from the Government of the Cayman Islands.
- US Tax Information Exchange Agreement:
The Cayman Islands and the United States have a bilateral agreement, in force since 2006, which allows both governments to request tax information in accordance with global tax-information exchange standards. The US-Cayman Islands Tax Information Exchange Agreement was one of the first such agreements signed by an offshore jurisdictions and the US has recognised the Cayman Islands for its responsiveness to its requests for information.
- Promotion of Compliance with US Tax Laws:
To assist Cayman residents who are US citizens or residents in complying with US tax laws, the Cayman Islands Government held an information seminar in April 2011 to educate these persons about their US tax obligations. The Cayman Islands Government is continuing this educational effort with a two -part series on US tax obligations, scheduled for 31 January and 1 February this year, involving presentations by US-based tax attorneys and accountants.
- Confidential Relationships Preservation Law:
The Confidential Relationships Preservation Law does not block the exchange of information with the US Government. The law complements bilateral agreements in that it allows access to information on legal grounds. The law does not allow requests for information to be made without a sound legal basis. Because it does not block legitimate requests for information, the Confidential Relationships Preservation Law is not a secrecy law. Because the law is in place, however, it means that a person without a legal reason to request information – for example, a person’s neighbour, work colleague or boss – cannot access someone else’s information.
- Mutual Legal Assistance Treaty:
See accompanying fact sheet.
- Global Recognition:
Cayman’s legal, regulatory and judicial framework has been recognised as being of high standard by the OECD and other international organizations at the forefront of global tax-information exchange efforts. The Cayman Islands also has been recognised by the US Department of Justice and the IRS for its high level of cooperation with US law enforcement efforts. For example, in a 2008 report by the US Government Accountability Office, the US Department of Justice describes the Cayman Islands as “one of our best partners” among offshore jurisdictions in law enforcement matters.
- Small IFCs and the Global Economy:
Small international financial centres are an important element that supports the global economy.
- They foster international trade and economic growth as facilities for trade and financial services intermediation.
- They allow collective investment among investors with varying characteristics.
- They provide liquidity to markets, lowering the cost of capital for business.
- They provide tax-neutral, low-cost facilities for cross-border foreign direct investment aiding economic growth [for G20 countries].
Similar to some states in the US, the Government of the Cayman Islands funds its operations through means other than an income tax. This approach does not absolve an individual or a business from paying the required taxes in their home jurisdictions and the Cayman Islands encourages tax compliance. The Cayman Islands Government receives its revenue through consumption-based duties and fees.
- Use of Post Office Box Addresses:
There is no home / business delivery of mail in the Cayman Islands. Like some places in the US and elsewhere, this means that all residents , including companies, use post office box addresses and collect their mail directly from post offices. All post offices offer “outside” boxes (such as those shown in the ABC News broadcast) so that persons may collect their mail at any time, instead of only when the post offices are staffed.
There are 15 post office locations in the Cayman Islands, with a total of 11,000 boxes available for all 54,000 residents.
- Financial Stability Board (FSB), 2 November 2011: The Cayman Islands’ cooperation standards were assessed as being among the world’s best by the FSB, which stated that the jurisdiction’s adherence to global regulatory and supervisory standards on international cooperation and information exchange was “sufficiently strong” – the highest assessment possible. The FSB is a supranational body whose membership includes the Organisation for Economic Cooperation and Development, and the Committee on the Global Financial System.
- (OECD) Global Forum ( 12 September 2011): “The Cayman Islands has moved quickly to address the shortcomings identified in its 2010 review in respect of the availability of accounting records. In addition, the supplementary report recognises the 5 new tax information exchange agreements signed by the Cayman Islands, and removes the concern originally raised with respect to nominees and the availability of ownership information.”
- US Government Accountability Office, 'Cayman Islands – Business and Tax Advantages Attract US Persons and Enforcement Challenges Exist' (July 2008)
- A senior official in the DOJ’s Office of International Affairs described the Cayman Islands as "one of DoJ’s best partners among offshore jurisdictions."
- "US officials consistently report that cooperation by the Cayman Islands government in enforcement matters has been good"
- "The Cayman Islands is the busiest United Kingdom overseas territory with regard to requests for information, but also the most cooperative
- (Concerning Cayman’s reputation): "Stable, business-friendly environment with a sound legal infrastructure [which] also attracts business. This activity is typically legal."
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at email@example.com.