The Cayman Islands, a British overseas territory, is to be put on the European Union’s list of “non-cooperative tax jurisdictions” less than a month after the UK’s withdrawal from the bloc.
The Cayman Islands will join the ranks of “blacklisted” territories, which already include Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three US territories of American Samoa, Guam, and the US Virgin Islands.
The EU set up its list of non-cooperative tax jurisdictions in 2017. Blacklisted countries face difficulties accessing EU funding. European companies doing business in those jurisdictions have to take additional compliance measures.
The Cayman Islands and British Virgin Islands (BVI) were placed on the EU’s “grey list” in 2018 due to concerns that they facilitated offshore structures that attracted profits without real economic activity. Whilst BVI has managed to satisfy obligations, officials said the Cayman Islands did not pass legislation that adequately addressed concerns about companies who claim tax advantages, but do not have adequate “economic substance” on the island. The Cayman Islands is well known for housing investment funds, and an EU document revealed concern that these funds do not reflect real economic activity in the territory.
Other new additions to the list include Seychelles, Panama, and Palau.
Panama, which is already blacklisted for money-laundering by the Financial Action Task Force (FATF), was added because of shortcomings over exchanges of tax information.
The eastern African archipelago of the Seychelles was also added to the blacklist because it has a “harmful preferential tax regime,” according to the document.
Officials said that Turkey, which is currently on the grey list, would not be moved to the blacklist despite concerns about its information sharing with some EU member states.
The Bahamas and Armenia will be removed from the list. It was confirmed in 2019 that UAE had been removed as well.
For more information, please contact us.