The Cayman Islands has been added onto the Netherlands new low-tax jurisdictions list, dubbed blacklist, of 21 jurisdictions considered to be tax havens, as Amsterdam looks to roll out new measures to combat tax avoidance.
Companies registered in the jurisdictions on the list face paying 20.5% tax from 2021 on interest and royalties received from the Netherlands. This will prevent funds being channelled to tax havens through the Netherlands, the Dutch finance ministry explained.
The Netherlands list is longer than the EU blacklist which has only five states – American Samoa, the US Virgin Islands, Guam, Samoa, and Trinidad and Tobago.
In addition to these five, the Dutch list has: the Bahamas, Bahrain, Belize, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Kuwait, Qatar, Saudi Arabia, the Turks and Caicos Islands, Vanuatu and the United Arab Emirates. These jurisdictions either have no corporation tax or have a corporation tax rate that is lower than 9%.
“The Dutch list will be updated each year, while the EU list will be updated in the first quarter of 2019. If, in the future, jurisdictions are added to the EU list that are not on the Dutch list, the measures will also apply to these jurisdictions,” the finance ministry said in a statement.
In response to the Dutch listing, Cayman premier Premier Alden McLaughlin (pictured) issued a statement saying: “The Cayman Islands Government regrets the unjustified “blacklisting” and rejects it as wholly lacking in fairness and credibility.
“It is unfortunate that The Netherlands has chosen to attempt to divert criticism of its own tax practices by attacking the legitimate tax regimes of other jurisdictions.”
Elsewhere, McLaughlin said: “While businesses domiciled in the Cayman Islands do not pay direct taxes to our jurisdiction, our laws and regulations ensure that the taxes owed to those home jurisdictions are paid.”
Cayman, like the British Virgin Islands and other offshore jurisdictions, is widely considered to be a tax and financial crime haven. It has tried to shed this image, partly by insisting that it has signed up to a number of international regulatory agreements or standards.
However, financial crime scandals and other issues linked to the jurisdiction have damaged its reputation.
Count reading this article to your CPD minutes, by signing up to our CPD Wallet
FREE CPD Wallet