Brussels – British overseas territory the Cayman Islands has been placed on an EU tax-haven blacklist, along with Palau, Panama, and the Seychelles.
The latest decision made by the EU Finance Ministers on Tuesday, 18 February 2020, follows the UK’s departure last month from the European Union. The Ministers said it was listed because investment funds based there do not reflect real economic activity.
The four black-listed countries join Oman, Fiji and Vanuatu, which have also been accused of failing to crack down on tax abuse.
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, allowing firms to register there, despite having minimal presence in the territory.
The jurisdiction was previously on a ”grey list” that gave it time to introduce new laws to tackle tax deficiencies. But it did not implement the “economic substance” reforms by the deadline as promised, the EU said.
Cayman Islands’ Premier, Alden McLaughlin, said the government has approved many reforms sought by the EU and has already contacted the EU about the process of being removed from the blacklist.
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.
Officials said that Turkey, which is currently on the “grey” list, would not be moved to the blacklist despite concerns about its information sharing with some EU member states.
The list of non-cooperative jurisdictions for tax purposes, which the EU started in 2017 to put pressure on countries to crack down on tax havens and unfair competition, included 15 countries in 2018 but has since shrunk.
The other listed jurisdictions are Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands.