Originally Posted by cifsa

The Cayman Islands are not a tax haven. The Cayman Islands have full tax transparency treaties with the IRS and the European Union jurisdictions and cannot be used to evade tax as all the information on any account is available to the tax authorities in the United States and Europe.

The term “tax haven” actually describes those jurisdictions that have no tax transparency treaties. These jurisdictions include countries with close ties to the U.S., and the U.S. government is fully aware of their status. They include Switzerland, Dubai, Hong Kong, Singapore, Andorra, Lichtenstein and Monaco.

U.S. corporations are taxed in the jurisdiction in which they operate – including their subsidiaries, regardless of where they are incorporated. Offshore financial centers like the Cayman Islands simply enable American companies to compete internationally and reinvest their profits.

Of course, treaties with the U.S. – like the Tax Information Exchange Agreement – ensure financial transparency and make certain tax evasion does not occur. These treaties provide a clear distinction between the Cayman Islands and non-transparent jurisdictions such as those listed as uncooperative tax havens by the Organisation for Economic Co-Operation and Development (OECD).

Cayman Islands Financial Services Association, which represents the financial servics industry in the Caymans, fully supports amending the tax reporting legislation to provide fully proactive reporting to the U.S. that mirrors the structure with all 27 European Union jurisdictions under the EU Savings Directive.