A new report from two United States-based watchdog groups names the Cayman Islands as a top tax haven. This comes as the US congress and Obama administration are considering big changes to their corporate tax code, changes that aim to clamp down on tax loopholes.
Finance industry experts here tell Cayman 27 the report is politically motivated, and that Cayman isn’t helping corporations dodge their tax responsibilities.
Citizens For Tax Justice and the US Public Interest Research Group are slinging mud at the Cayman Islands in a new joint report that calls Cayman one of the top tax havens for US companies.
“What is not appropriate is to do is to demonize the Cayman Islands as a result of these corporations relying on perfectly lawful and appropriate provisions of United States law,” said Anthony Travers, Commissioner of the Cayman Islands Stock Exchange.
Mr. Travers told Cayman 27 the US tax laws are structured to prevent Uncle Sam from double-dipping.
“The reason that [the laws are] there is to stop us corporations that undertake lawful trading overseas, that is to say outside of the us, from being taxed twice,” said Mr. Travers.
“The US might want to end up with a more fair tax system. They have every right to decide their own tax system, but Cayman is not facilitating any evasion or anything outside the tax system,” said Cayman Finance’s Gonzalo Jalles, “The reality is [US corporations] are running entities around South America mainly, Central America, Europe and other places, and to do that within the US would be extremely complicated because of the tax treaties agreement.”
Mr. Jalles told Cayman 27 the US corporations pay taxes in the jurisdictions where they do business, using Cayman as a hub for overseas operations.
“Cayman gives you a legal safe framework to do it without adding taxes, and simplifying they way to pay the taxes in each of those countries,” said Mr. Jalles.
Both men claim Cayman keeps getting a bad rap while doing nothing wrong.
“They have not reduced their tax bill by using Cayman, so the argument is nonsense,” said Mr. Jalles.
“That’s what we have to refute, because it’s none of those things,” said Mr. Travers.
Cayman 27′s Joe Avary filed this report.