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Cayman defends its reputation as a 'perfectly transparent jurisdiction'

Wednesday, August 31, 2011
Opalesque Industry Update - This week’s article in the left wing UK newspaper, the Independent, headed “There is no moral case for tax havens,” repeats the hoary old clichés and, predictably, mentions the building in the Cayman Islands “that is home to 12,000 corporations.”

Strangely, the writer, Paul Vallely, omits to mention the office at 1209 North Orange Street in Wilmington, Delaware with 217,000 names on the door. If he had, he could have reminded us that this seemingly inconsequential building sits in the home state of Vice President Joe Biden.

Despite the fact The Cayman Islands facilitates the flow of trillions of dollars funded from the international capital markets to the balance sheets of US financial institutions, its demonization continues.

The left wing press, particularly in the UK, seems determined to suspend factual analysis. The effect has been to conflate Cayman, a perfectly transparent jurisdiction focused on beneficially directing international capital flows in a tax efficient manner, with non transparent jurisdictions such as Andorra, Monaco Liechtenstein and Switzerland and others where, as the facts slowly emerge ,we inescapably conclude that tax evasion actually occurs.

No one disagrees that tax evasion is wrong. Certainly not anyone in the Cayman Islands where the transparency debate was concluded over 20 years ago.

Little publicized full transparency tax treaties with the United States and the European Union have been in place with The Cayman Islands for many years.

Only the criminally insane tax evader would attempt to use the Cayman Islands given the sweeping powers of the IRS, DOJ and the European Treasuries to obtain full information on any Cayman account. Yet we find that the expressions ”evasion”, “outrage “,”loopholes “ and ”avoidance”, are now used interchangeably and indiscriminately to describe Cayman financial structuring without reference to legal and accounting precedent, standard or principle or the factual treaty position.

To present a balanced article on offshore tax The Independent should have quoted Daniel J. Mitchell’s work for The Liberal Institute of the Friedrich Naumann Foundation entitled, “The Moral Case for Tax Havens.”

Dr Mitchell concludes that the campaign against low-tax jurisdictions (headed up by organizations such as the EC, United Nations and the Organisation for Economic Cooperation and Development) is fundamentally misguided.

He says, “They provide a low-tax platform for economic activity. They facilitate the efficient allocation of capital. And because of tax competition, they encourage better tax law in the rest of the world. “

Echoing a point made earlier in this article he says, “Tax competition affords taxpayers the ability to enjoy more of what they earn. This in turn draws savings, investment and skilled labor into the economy.”

The trouble is that excessively high taxes punish the sub millionaire, middle classes with two cars in the garage and three children heading for college. Stifle this section of the community and you’ll soon have no community.

(press release)

This was authored by Richard Coles, the Chairman of Cayman Finance, the body which represents the financial services industry on the islands.

The Independent’s article can be found here: Source


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