Cayman moves to receive ‘white list’ status from the EU

The move is a response to the EU’s announcement of the same day that it had added Cayman to the so-called “blacklist”. Cayman expects to be removed from the list and to be recognised as a cooperative jurisdiction as soon as possible, although it will likely have to wait until October as that is the date of the next meeting of the EU Code of Tax Conduct group.

The EU made the announcement just weeks after Brexit. While the Cayman Islands are largely autonomous and have their own Government, they are a British Overseas Territory. territory.

‘In the past couple of years, Cayman’s legal and regulatory framework has undergone significant change. Many of the implemented reviews of regulations changes which were implemented were instigated at the request of the EU. As a jurisdiction, Cayman understood that implementing the new legal frameworks was necessary to avoid blacklisting by the EU regardless of the utility of the new measures. ‘The threat of being placed on the EU blacklist with its toxic PR associations has given the EU a large stick to wield’ says Peter Cockhill, Managing Director, ZEDRA Cayman.

It is thought that the listing comes because Cayman failed to pass The Private Funds Law and The Mutual Funds (Amendment) Laws by the deadline set by the EU. The laws concern economic substance requirements related to Collective Investment Vehicles (‘CIVs’). While the Cayman Government had passed some legislations addressing CIVs within the timeframe set by the EU, the laws were not enacted until the 7th February, which fell outside of the EU’s deadline.

‘While the EU’s announcement is disappointing and suggests that the EU is more concerned with control of the PR narrative and with appearance rather than substance, past efforts and the updated legislation underline Cayman’s longstanding commitment to cooperating with the EU and other international bodies on tax transparency and reporting. The process and request that Cayman is removed from the ‘non-cooperative’ list of countries has already begun, and Cayman’s Government has reiterated that it is committed to working with the EU with the aim of being compliant with relevant legislation in the minimum timeframe. It will be interesting to see if this one-sided relationship with the EU continues to be endured by Cayman once the UK reaches the end of its transitional arrangements with the EU in 2021’ adds Peter.

For more information, please contact David van Duynhoven.