“OXFAM CRITICISED THE EU LIST AND SUGGESTED THAT BY
TAKING AIM AT COUNTRIES OUTSIDE THE EU, THIS STEP HAS
STRONGLY HARMED THE CREDIBILITY OF THE PROCESS.”
Revenue Service and US state tax collectors receive a healthy fl ow
of tax dollars generated directly by Cayman captive insurance
There is a great deal of uncertainty surrounding the possible impact of
the EU’s blacklist and grey list, whether countries’ reputations will be
damaged or whether they could even face sanctions from the EU and
its individual member states.
However, beyond being named, the jurisdictions targeted face few, if
any, consequences from the blacklist.
In terms of captives operating in the Cayman Islands, Humphries
suggests that the impact will likely be limited—although there is some
uncertainty over the extent to which any newly introduced substance
and reporting requirements might extend to already regulated entities
“Vexing as the situation is for Cayman as a jurisdiction, there is not
currently a great deal of concern for Cayman captives who will likely
remain largely unaffected and should be able to get on with business
in the normal course,” he says.
Aside from the consequences of the EU’s list, it has also been subject
to a great deal of criticism, in the Cayman Islands and worldwide.
“The Cayman Islands government is currently working closely with
the relevant EU representatives in an effort to educate on the nature
of Cayman Islands companies, the role they play in international
fi nancial markets, and to discuss what steps Cayman can take to
address concerns, and hopefully avoid a place on the blacklist moving
forward,” says Humphries.
One of the major criticisms of the list is the inconsistency in the
treatment of non-EU countries that have been targeted, compared
with those within the EU’s borders.
In November 2017, Oxfam published a report, Blacklist or whitewash?,
which showed that, according to the EU’s own criteria, four countries
within the EU should be blacklisted but are not. These countries are
Ireland, Luxembourg, the Netherlands, and Malta.
Oxfam criticised the EU list and suggested that by taking aim at
countries outside the EU, this step has strongly harmed the credibility
of the process, as Ireland, Luxembourg and the Netherlands are some
of the most powerful tax havens in the world, enabling the largest
corporations to pay minimal tax.
Along with Cayman, jurisdictions such as Bermuda, Jersey,
Guernsey and the Isle of Man are in talks with the EU over how to
address its concerns around tax matters, in particular economic
“Many, if not all of these jurisdictions, will have to implement some
level of change to increase economic substance and have more
‘mind and management’ actually located in the relevant jurisdiction,”
“At this stage it’s very diffi cult to know exactly what these requirements
will be because no set defi nition or test exists and there has been very
little indication from the EU (at least publicly) of what their expectations
“Negotiations are ongoing and we hope to have more clarity on the
issue in the very near future.”
50 cayman captive 2019
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