Wednesday, June 24, 2009Cayman To Sign TIEA With Ireland & France

Caymannetmews.comNew tax agreements with Ireland and France coming

New tax agreements with Ireland and France may be imminent, boosting Cayman to within a single accord of the 12 required to escape the international “greylist” of non-compliant offshore jurisdictions, while talks with five other countries are complete.

The news comes on the heels of Tuesday’s double-taxation agreement with the UK that the Cayman Islands delegation and independent analysts say qualifies as the Cayman Islands’ ninth Organisation of Economic Cooperation and Development (OECD)-approved tax information exchange agreement (TIEA).

Meanwhile, delegation chief, Leader of Government Business/Premier Designate and Minister for Financial Services, Hon McKeeva Bush, said he would sign “letters of agreement” with governments not prepared to finalise a full TIEA, setting the stage for quick future agreement.

“I understand that Ireland is likely to be next on the list and the plan is to sign during next week,” said former Chairman of the Cayman Islands Monetary Authority (CIMA) and financial commentator Tim Ridley.

“I believe there is hope that a TIEA with France is achievable and France has agreed. I also hear that negotiations are concluded with Canada, Australia, New Zealand, Netherlands and Germany.

Presumably, the Cayman Islands government will be talking to the Germans while in Europe,” he said, suggesting additional talks were planned with the Czech Republic and Italy.

The McKeeva Bush-led delegation, which left Cayman on 5 June for a three-week tour of the US and Europe, includes Chief Secretary Hon George McCarthy; Attorney General Hon Samuel Bulgin; Financial Secretary Hon Kenneth Jefferson; CIMA Managing Director Cindy Scotland and Deputy Managing Director and Langston Sibblies; financial adviser Paul Byles; Chief Officer for Tourism and Development Carson Ebanks; and United Democratic Party MLA and Deputy Speaker of the House Cline Glidden.

Mr Bush said he would sign commercial agreements with Nordic jurisdictions on Wednesday and as many TIEAs as possible.

“We signed with the UK in order to get off the grey list, and tomorrow [Wednesday] will sign commercial agreements,” he said, without specifying which jurisdictions were involved.

On 1 April, then Minister with responsibility for international financial policy, Alden McLaughlin, signed bilateral agreements with Denmark, Greenland, the Faroe Islands, Sweden, Norway, Finland and Iceland, clearing the way for subsidiary commercial pacts on such things as airline and shipping registries and other arrangements requiring exchange of tax information.

The Cayman Islands already has eight bilateral agreements and needs another four, according to OECD rules, to gain a “whitelisting” as a fully compliant international financial jurisdiction. The country holds 12 other similar agreements, but under its own “unilateral mechanism”, which has not gained OECD approval.

In the wake of Tuesday’s UK accord, Mr Bush was unable to say if he would seal another three agreements, but pledged an aggressive campaign.

“I’m going to say that we will sign as many TIEAs as possible. Some [countries] cannot because they have to lay them before their Parliaments, but those we can’t sign with at the time, we will give letters of agreement that will help us,” Mr Bush said.

He rejected questions about the double-taxation agreement, saying it “definitely” qualified as a TIEA. While he did not elaborate, Mr Ridley supported the claim.

“The agreement with the UK includes tax information exchange provisions,” Mr Ridley said, “that pretty much follow the relevant provisions of the current OECD model tax convention.” While phrasing varies slightly from the OECD model, the Paris-based group considers it the “functional equivalent” of a tax exchange.

Mr Ridley warned of OECD politics, however, when Cayman gains the dozen requisite agreements.

“I am nervous that the OECD (or the Group of 20 and others) will have moved the test to ‘effective implementation’ and peer review by the time Cayman gets to the required number,” he said. “If this happens, Cayman will be stalled until there is evidence of a meaningful number of requests under the TIEAs and DTAs [double taxation agreements], satisfactory responses and an assessment -- no doubt by a committee of OECD members -- that Cayman is actually executing what it has signed up to.”

He pointed to domestic problems with Cayman’s Confidential Relationships (Preservation) Law and other “technical points” as potential obstacles to acceptance.

“I do not think we will finally know whether Cayman will get on to the white list until we get 12-plus agreements,” he said. “I think that to get four actually signed immediately may be unduly optimistic, but perhaps there will be firmer and encouraging information about the additional jurisdictions that are genuinely willing and able to sign TIEAs or DTAs.”

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