No more hiding in the Cayman Islands?
By Michael Northcott Friday, 18 January 2013
It's long been a haven for the world's richest to keep the taxman's dirty hands off of those juicy incomes and profits. But now things ain't so secret...
Don’t ask why, but the British overseas territory of the Cayman Islands is embarking on a scheme to reveal which companies and directors have been hiding money in the jurisdiction, according to a report from the FT.
The Cayman Islands have long been lambasted for helping the super-rich keep their money quiet, and for generally being a super-secretive financial system. But now, the islands’ central financial authority, CIMA, has sent proposals to hedge funds based there outlining plans to establish a public register of cash that has been domiciled on the island.
Of course, it’s subject to a consultation period, and there will no doubt be some very powerful voices objecting to the creation of such a database, but it is nonetheless notable that the jurisdiction should even be considering such a move.
According to the FT, CIMA said in one document: ‘In the 24 months subsequent to the onset of the financial crisis, the BVI Financial Services Commission, the Central Bank of Ireland, the Jersey Financial Services Commission, the Bahamas Financial Services Board and the Isle of Man Supervision Commission all updated their corporate governance codes, laws and/or regulations.’
That means very little to us, but it certainly sounds like reforms could be on the cards. Even so, apparently CIMA did not respond to the FT’s request for comment.
It will be a bit of a pain in the neck for several international companies with UK operations. An example is Facebook, which it emerged last month in filings had moved around £500m into a Cayman Islands account, presumably as a way of trying to reduce its tax burden in other jurisdictions.
Still, making it transparent does not eliminate the tax haven, and even if it did, there are dozens of other places through which multi-national companies can channel their sales to avoid paying any serious tax. Luxembourg for one. The Channel Islands for another.
Political pressure to tighten up on disclosure seems to be the order of the day, and this looks like a nice little bit of PR to try and come across as the 'nicer' of the tax havens...