The Cayman Islands government says it’s awaiting confirmation from the European Union following international media reports that the territory has been placed on the European Union’s (EU) tax blacklist.
Reputable international media outlets reported on Wednesday that the Cayman Islands had become the first UK territory to be blacklisted by the EU for failing to address concerns about tax abuse.
It is said that the government here had not put adequate legislation in place to prevent companies from claiming tax advantages without having an adequate business presence in the territory.
While the decision is said to have been taken on Wednesday, the Cayman Islands government says it is still awaiting formal notification.
In a statement issued shortly after the news broke, the government said the EU Ministers of Finance will make the final decision at a meeting to be held on 18th February, “and as such we have yet to receive confirmation of an EU decision.”
In defending its policies, the Cayman Islands government argues that it believes it has “introduced the appropriate legislative changes to enhance our regulatory framework, in line with the EU’s requests.”
“Over the past two years the Cayman Islands Government has adopted a number of fundamental legislative changes to enhance tax transparency and cooperation with the EU, fully delivering on our commitment to strengthen our regulatory regime and addressing the concerns reflected in the EU Council conclusions of 12 March 2019.”
The statement also points out that “the Cayman Islands Government has offered to make itself available for further dialogue or clarification with the Commission and the EU Ministers of Finance.”
But EU officials insist that the Cayman Islands hasn’t done enough to meet EU requirements.
The decision to place the Cayman Islands on the black list comes less than a fortnight after the UK has left membership of the EU.
With trade talks about to start between them, the thorny issue of tax standards is already being red-flagged as a sore point, and the financial sectors of the UK’s Overseas Territories is expected to inevitably be a factor in the negotiations.