The Cayman Islands has been added to the European Union’s tax haven blacklist. According to the EU, the UK overseas territory has failed to implement tax reforms they had committed to by the agreed deadline.
The EU Blacklist was set up as part of the EU’s strategy on effective corporate taxation, with a view to improving tax governance on a global level. Currently (as at 26 February 2020), the other members of the EU Blacklist are: American Samoa, Fiji, Guam, Oman, Palau, Panama, Seychelles, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.
The EU said the Cayman Islands, which has no income tax, capital gains tax or corporation tax, does not have “appropriate measures” in place to prevent tax abuse. The lack of measures enables firms to register there despite having minimal presence in the territory.
Previously Cayman Islands territory was placed on a “grey list” which required the introduction of new laws to tackle tax deficiencies. However, the ‘”economic substance” reforms were not introduced by the deadline as promised.
The Cayman Islands is the first UK territory to be added to the EU blacklist.
Blacklisted countries face difficulties accessing EU funding programmes, while European companies doing business in those jurisdictions have to take additional compliance measures.
