The Cayman Islands in February 2020 was added to the EU’s list of non-cooperative jurisdictions for tax purposes.
Reason for blacklist designation
Since the establishment of the EU’s non-cooperative tax jurisdiction list, the Cayman Islands has adopted more than 15 legislative changes in line with the EU’s criteria. In April 2019, the EU confirmed that the Cayman Islands had satisfied its economic substance requirements, with the exception of economic substance for investment funds/CIVs. This was a specific EU requirement because the Cayman Islands economic substance legislation was evaluated in June 2019 as “not harmful” (the highest positive rating possible) by the OECD’s Forum on Harmful Tax Practices.
As a result, the Cayman Islands government passed the Private Funds Law and the Mutual Funds (Amendment) Law—both of which addressed the EU’s concerns for CIVs. These laws were enacted and effective 7 February 2020. However, it appears that the blacklisting by the EU was due to the legislation not being in effect by 4 February 2020 (the date of the EU’s Code of Conduct Group meeting).
Implications of blacklist designation
Read a February 2020 report [PDF 224 KB] prepared by the KPMG member firm in the Cayman Islands
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