Business

Monday May 25, 2009

Cayman bankers lobby Washington to redefine image


WASHINGTON: A group from the Cayman Islands lobbied Washington last week to redefine the image of its banks and other financial institutions after President Barack Obama singled out the British territory as a tax haven.

Tony Travers, head of the Cayman Islands Financial Services Association (CIFSA), argued that the islands were getting a bad rap, and he met with lawmakers, staff of members of the Senate Financial Committee and policy experts during his trip to Washington to say so.

”What does trouble us to the point where we are bemused, bothered and bewildered is the rhetoric, the constant reference to Cayman,” Travers told Reuters during his visit.

But tax experts said that while Cayman was not the world’s worst offender as tax havens went, it had a lot to address.

”I’m not terribly sympathetic,” said Alex Raskolnikov, a professor and tax expert at Columbia University Law School.

”Is it true that there are worse offenders? Yes. But it is also probably true that they have been facilitating tax avoidance.”

Obama has hammered tax havens, saying US companies and individuals using them should not “dodge their responsibilities while ordinary Americans pick up the slack.”

A congressional report has said that each year the United States loses about US$100bil to tax havens.

Obama targeted the Caymans specifically.

”On the campaign I used to talk about the outrage of a building in the Cayman Islands that had over 12,000 businesses claim it as their headquarters,” Obama said this month while discussing measures he wants implemented to curb tax avoidance and evasion. “I’ve said before either this is the largest building in the world or the largest tax scam in the world.”

”The reality of the situation is we have a full transparency treaty with the United States,” Travers said, adding that his group supports strengthening the treaty with more stringent reporting obligations.

The Caymans are three tiny Caribbean islands with a population of fewer than 50,000, most of whom live on Grand Cayman Island.

Travers contended that the Caymans had been erroneously grouped with countries like Monaco, Andorra and Lichtenstein, which have been labelled by the Organisation of Economic Cooperation and Development (OECD) as the three most uncooperative tax havens in the world.

The OECD labels countries tax havens if they have no tax or minimal tax, no useful information exchange system and a lack of transparency, among other criteria.

The Caymans are on a so-called gray list of countries that have agreed to certain OECD changes pertaining to taxes but have not implemented everything to which they agreed.

The government of the Cayman Islands said it believed the report painted it in “the lightest shade of gray.”

With their zero tax rate, the Caymans are home to 80,000 registered companies and had US$2 trillion in banking assets as of December 2007, according to the island’s monetary authority.

CIFSA supports legislation from US Senate Finance Committee chairman Max Baucus to give the Internal Revenue Service more staff and other necessities to pursue offshore tax evasion.

However, the Cayman business group opposes a bill from Senator Carl Levin that calls for increased penalties for failing to disclose offshore transactions.

On its website, http://www.caymanfinances.com, CIFSA says its mission is to “communicate the integrity and quality of financial services in the Cayman Islands to both the global and local market places.”

An Internet search for banks in the Caymans produces a long list with many recognisable names, among them some of the world’s largest financial institutions. — Reuters


Latest business news from AP-Wire

  • E-mail this story
  • Print this story