Expat IFA businesses in the Caymans in for a shock

The Cayman Islands are now heading for an EU blacklist after a failure to stem tax abuse.

Both the British Virgin Islands and the Caymans were grey-listed last year due to companies claiming tax advantages although they had little or no economic presence on the islands. As a result of failures to address the situation, the EU has now added the Caymans as well as Panama and the Seychelles to their 2020 tax haven blacklist. The new listings make a total of nine overseas tax havens designated as refusing to comply with the cooperation required by the European Union.

The Caymans are a major expat haven for offshore-based funds, with the EU’s request last year aimed at forcing an adaptation of investment fund legislation in order to bring its rules closer to those stated as EU standards. Also on the 2020 list are Vanuatu, Fiji and Oman, with Armenia and the Bahamas now removed. Other offshore tax havens still listed include Samoa, American Samoa, Trinidad and Tobago, Guam and the US Virgin Islands.

The blacklist itself is intended to clamp down on an estimated yearly £560 billion loss due to deliberate, aggressive tax avoidance by offshore jurisdictions aided and abetted by expat IFAs, although member states aren’t screened when the list is drawn up. Previously, pre-Brexit Britain attempted with some success to protect its several overseas territories from detailed scrutiny but, in this real post-Brexit world, it’s now beginning to realise heavy lobbying is no longer the answer.