Cayman Islands: Double Tax Treaties
Other Tax Information Exchange Agreements
In March 2009, the Cayman Islands government announced that it has put in place arrangements that provide access to comprehensive tax information assistance with twenty countries, including the majority of Cayman’s major trading partners.
Ireland, Japan, the Netherlands and South Africa joined eight other countries afforded tax information assistance under a unilateral mechanism, which does not require a bilateral treaty.
The Cayman Islands also had eight bilateral tax information agreements at this time, which included recent agreements with the Nordic countries as well as an existing agreement with the US signed in 2001.
The unilateral mechanism, introduced in 2008, provides an additional mode for the Cayman Islands to deliver on its commitment to transparency and exchange of information in tax matters.
“The Cayman Islands took the proactive step of introducing the unilateral mechanism for the provision of information in tax matters, as a complement to our bilateral negotiation programme,” said Cayman Islands leader of government business, Kurt Tibbetts, adding: “We recognised the need to increase the pace at which we could enter into tax information arrangements, while offering a phased approach to our negotiating partners under our bilateral programme in appropriate circumstances. We look forward to continuing this progressive approach.”
At this stage, the Cayman Islands’ tax information exchange network covered four of the seven G-7 states and seventeen of the 30 OECD member states.
In June 2009, a double tax agreement with the UK facilitating tax information exchange along OECD standards was signed by Stephen Timms, then Financial Secretary to the Treasury and McKeeva Bush, Leader of Government Business in the Cayman Islands.
HMRC Permanent Secretary for Tax in the UK, Dave Hartnett, commented:
“The information exchange provisions in this arrangement meet OECD standards of tax transparency and the agreement is especially welcome for that."
"Information exchange enables us to confront effectively tax avoidance and money laundering whilst ensuring that we all make the right contribution to our public services.”
Later the same month, the Cayman Islands’ government signed a Tax Information Exchange Agreement with Ireland at a ceremony held at the British Embassy in Berlin.
Commenting at the signing, Bush said that the agreement marked "another important step towards our ongoing commitment to international cooperation and OECD standards for transparency and exchange of information on tax matters. This signing will commemorate the beginning of what I am sure will be a highly productive and mutually rewarding relationship between the Cayman Islands and Ireland.”
Technical negotiating teams from the Cayman Islands and the Netherlands finalised the terms of an agreement and protocol for the exchange of information with respect to tax matters after two days of meetings in George Town on June 24- and 25, 2009. The text was initialled by both parties.
The draft agreement covers many of the standard provisions in the Organisation for Economic Cooperation and Development (OECD) model agreement for the exchange of information on tax matters. The agreement was signed later that month.
The Cayman Islands landmark 12th tax information exchange agreement was signed with New Zealand in August 2009, moving the jurisdiction onto the “white list” of countries that have “substantially implemented” the OECD’s internationally agreed tax standard.
The Cayman Islands’ Leader of Government Business/Premier Designate, McKeeva Bush, said: “For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services center. The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information."
"The Cayman Islands Government is looking forward,” Bush continued, “to working in partnership with competent authorities in implementing agreements it has signed, concluding additional agreements with Cayman’s important trading partners in financial services, and continuing its active role in the OECD Global Forum, which it committed to in 2000."
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcomed the signing, and said that the OECD looked forward to working further with the Cayman Islands as it extends its network of agreements and works to implement them swiftly and effectively.
The TIEA also includes an agreement for the allocation of taxing rights with respect to certain income of individuals (including pensions), and provisions to establish a mutual agreement procedure in respect of transfer pricing adjustments. It was earmarked to enter into force after notification by both parties, after which it will have effect for taxable periods beginning on or after the following January 1.
Another tax information exchange agreement, with France, was signed on October 5, 2009.
Bush said: “We hope that this agreement will act as a catalyst for French companies looking to diversify into new markets. Whilst providing the assurance of mutual cooperation, market access and smooth capital flows, we are hoping it will contribute to growth in international business and to stimulating our local economy.”
Later that month, the Cayman Islands signed a TIEA with the Netherlands Antilles, whilst attending the Caribbean Financial Action Task Force (CFATF) plenary, held in Curacao.
The agreement, the Caymans' fourteenth, was signed on behalf of the Cayman Islands by the Cayman Attorney General, Samuel Bulgin.
In March 2010, the Cayman Islands government committed to the signing of a further 16 TIEAs with jurisdictions of economic significance, in addition to the 14 TIEAs it had already concluded.
Cayman Island Premier, McKeeva Bush, and Sergio Vasques, the Portuguese Secretary of State of Tax Affairs, signed an agreement for the exchange of tax information in a ceremony on May 13.
Said Bush: “Some of Portugal’s major financial institutions which have a presence in the Cayman Islands and are licensed by our regulator, the Cayman Islands Monetary Authority. We see this as a sign of confidence in our financial services industry and we hope that this agreement may help expand opportunities for more commercial activities between our two countries.”
Also in May 2010, the governments of Japan and the Cayman Islands initialled a comprehensive double tax agreement with provisions to allow for the exchange of tax information in civil and criminal tax matters, in line with the jurisdiction’s commitment to improve transparency with third nations.
Elements in the agreement for the avoidance of double taxation will assign the taxing rights of the respective countries with regard to certain income of individuals such as pensions. It is expected that under the agreement economic ties between the two countries will be bolstered.
Welcoming the agreement on behalf of the Cayman Islands, Bush stated: “The Cayman Islands is pleased to have reached this agreement with our Japanese counterparts, particularly given the exceptional commercial relationships between our financial services sectors. The swift and efficient negotiation is a testament of both countries’ commitment to uphold and effectively implement international standards in the exchange of information on tax matters.”
The agreement, which at this point remained unsigned, will enter into force after the respective countries have undertaken their individual ratification processes.
May also saw the Cayman Islands and Germany entering into a TIEA following a signing ceremony held on the 27th.
The agreement was signed by the Cayman Islands’ Premier, McKeeva Bush and by Germany’s Ambassador to Jamaica, Jurgen Engel.
The agreement will allow for the exchange of tax information between the two countries’ tax authorities upon request, where there is evidence of the perpetration of fiscal crime, or in civil tax matters.
Speaking following the signing, Bush stated: “We have had a bilateral agreement with Germany in effect since 2005 as part of our implementation of the European Union Savings Directive, under which we report interest income earned by German citizens in Cayman Islands accounts. “
“Today’s comprehensive tax information sharing arrangements reflect our countries’ commitment to upholding and implementing international standards in an important area of the global financial services sector.”
“We look forward to many more years of successful work with our German counterparts."
The following month, the Cayman Islands and Canada entered into a tax information exchange agreement. The signing ceremony was held in George Town, Cayman Islands, and attended by Premier McKeeva Bush and Canada's High Commissioner to Jamaica, Stephen Hallihan.
“The signing of this important bilateral agreement marks a significant milestone in the long-standing relationship between the Cayman Islands and Canada,” said the Premier. “It is well known that Canada’s top financial institutions have had retail and institutional operations in the Cayman Islands for more than 45 years, but the ties our two countries share go far deeper. They extend to educational opportunities for Caymanian youth, professional experience for Canadian practitioners and a mutual admiration that has brought together many Canadian and Caymanian families.”
The agreement entered into force on 1 June 2011.
January 2011 saw the successful conclusion of negotiations for a tax information exchange agreement between the Cayman Islands and Spain. One of the major points of the agreement is that, once in force, Spain will no longer classify the Cayman Islands as a ‘tax haven’ under its domestic legislation.
“The conclusion of negotiations with Spain and the anticipated reclassification of the Cayman Islands under Spanish tax law represent significant progress in the Cayman Islands international tax transparency programme,” said Cayman Islands Premier and Minister of Finance, the Hon. McKeeva Bush, OBE, JP. “Spain is also an EU member state and a G-20 country and therefore, Cayman’s agreement fulfils the objectives of our negotiation strategy, which is focused on concluding TIEAs with nations in these two groups.”
On February 7, 2011, the Cayman Islands and Japan signed a second TIEA that includes provision for pensioners, students, Government employees and residents of Japan, ensuring the avoidance of double taxation.
Cayman Islands' Premier, McKeeva Bush, commented after the signing: “This agreement also demonstrates the acceptance of the major G-20 jurisdictions in acknowledging the valuable role the Cayman Islands plays in international financing transactions. We fully intend to continue to demonstrate that tax compliance is a matter of course for the Cayman Islands and we are confident that as a result, our jurisdiction will become increasingly well respected in matters of international financing. We look forward to further enhancing our relationship with the Japanese Government, as we work closely with them on the OECD Global Forum Steering and Peer Review Groups.”
The Cayman Islands signed its twenty-second Tax Information Exchange Agreement (TIEA) on 22 March, 2011, with India, strengthening the commercial relationship between Cayman and one of the world’s fastest growing economies.
Following the signing ceremony held in George Town, Grand Cayman, the Premier, the Honourable W. McKeeva Bush said: “Our Government has a strong working relationship with our Indian counterparts, and we look forward to implementing the terms of this TIEA. ”Signing the agreement on behalf of India was India’s High Commissioner to The Bahamas, the Cayman Islands and Jamaica, His Excellency Mohinder S. Grover.
”Both countries are members of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, and are involved in the Peer Review Process; therefore ensuring the effective implementation of the international standards of transparency and exchange of information for tax purposes,” Mr. Bush added.
It was announced in August, 2011, that the Cayman Islands had signed a Tax Information Exchange Agreement, the 26th for the Cayman Islands, and the first for Guernsey with a Caribbean Country.
On September 26, 2011, a signing ceremony was held to mark the agreement on a Tax Information Exchange Agreement between the Cayman Islands and China. Cayman Islands' Premier, McKeeva Bush said that signing the treaty was a significant step in enhancing the relationship between the two countries.
A further Tax Information Exchange Agreement with Argentina was signed by Premier McKeeva Bush on October 13, 2011.
Since then, TIEAs have been signed with Mexico, South Africa, Qatar, the Czech Republic and Italy.