The Cayman Islands continue to work through a series of legislative changes as efforts continue to remove the territory from a European Union tax ‘blacklist’.
In the latest move, a series of amendments to existing laws were piloted by Hon. Minister of Financial Services Minister Tara Rivers during Monday’s sitting of the Legislative Assembly.
In February this year, the EU included Cayman in a list of countries it said didn’t have "appropriate measures" in place to prevent tax abuse.
The government has insisted that it continues to comply with agreed EU regulations and is working towards an October deadline to be removed from the EU’s blacklist.
In the most recent package of legislation, Financial Services Minister Rivers pushed through a number of changes to tighten up governance and compliance.
One of five laws dealt with how the Tax Information Authority (TIA) ensures compliance with local and global processes.
Min. Rivers said it was “to ensure that the functions and powers of the TIA are adequate, fit for purpose and will stand up to scrutiny in the OECD peer reviews and assessments against international standards.”
She further stated that “the TIA was also developing a one-stop integrated IT system to be launched this year to streamline data sharing between relevant government divisions concerned with the monitoring and compliance.”
According to Min. Rivers, while the “does not create or impose any new or modified obligations on individuals or entities…it creates the scope for penalising companies and individuals providing false or misleading information to the authorities.”
Making an intervention as the Official Opposition's spokesmen on the financial sector, Hon. MLA Chris Saunders (Bodden Town West) sought clarity on the functions of the TIA.
“I would just like some comfort level with this agency and who they are that’s handling this information. I would really like to understand the oversight and the process. What is being done with some of this information, who is collecting it, where is it going and more importantly who’s checking to make sure that information that shouldn’t be leaving this jurisdiction isn’t leaving this jurisdiction?” he queried.
Mr Saunders said he accepted that as a global financial centre there are international obligations. to be followed.
But he was keen to point out: “At a minimum people do expect a certain amount of privacy and I just need to make sure that the powers that be are actually reviewing the operations of this entity.”
On its website, the Tax Information Authority (TIA) is described as the sole dedicated channel in the Cayman Islands for international cooperation on matters involving the provision of tax-related information. The TIA is a function of the Department for Tax International Tax Cooperation.
Responding, Financial Services Minister Rivers reassured that “the law itself contains the confidentiality provisions and agreements…and so there would be mechanisms in place to ensure that if, in a worse case scenario, there were breaches it would be dealt with pursuant to the law itself.”
Min. Rivers said the objective was also “to demonstrate the robustness of the jurisdiction as it relates to carrying out the various international treaty obligations.”
Also, during Monday’s sitting existing legislation on The Reporting of Savings Income Information (European Union) was repealed.
That law which dates back to 2005 deals with interest payments on savings.
Min. Rivers reported that since that law came into force, “international agreements with the EU and the need for domestic legislation have been superseded due to establishment of new global standards by the OECD for the automatic accounting and exchange of information for all EU member states.”
She said such exchanges however no longer take place under the former agreement making the law redundant.
Opposition MLA Chris Saunders commented that the Cayman Islands was spending “way too much time not innovating new products…but rather innovating new regulatory regimes.”
He asked who is growing the brand of the Cayman Islands “ensuring that the business (Cayman) maintain its competitive advantage?”
Other amendments dealing with mutual funds, private funds and exempted limited partnerships were also passed.
Hon. MLA for George Town Central, Kenneth Bryan, commended the government, on what he called “their continued effort to stay ahead of the game.”
He noted that Cayman depended heavily on the financial services sector, the second economic pillar, especially more so since the COVID-19 pandemic.
Referring to the number of bills related to financial services coming to the Legislative Assembly in comparison to other matters, he observed:
“It just struck me how important that is because although we have our differences in policy direction I don’t think there’s any question that financial services is a very fluid industry and ever-changing.
"Just the mere action of constantly changing and amending to make sure that we stay on top in the industry shows there’s a commitment, no matter what side you are on."
Mr Bryan further stated that he wanted to show the government that it has his full support on the changes as they are intended to ensure that Cayman keeps one step ahead of other jurisdictions.
Monday’s sitting was the second dealing with financial sector issues since the EU blacklisted Cayman in February.
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