CIFSA Backs Decision Over EU Savings Tax

Friday, April 2, 2004

The Cayman Islands Government’s decision to go with the automatic information exchange option for the proposed European Union Savings Tax Directive (EUSD) has been strongly supported by the Cayman Islands Financial Services Association (CIFSA).

The support was expressed in a press release issued on Tuesday by CIFSA, which is a private sector organisation formed in December 2003 to promote the integrity and quality of the financial services in this country.

Under the EUSD, countries may choose a withholding tax or automatic information exchange systems.

Although the European Commission encourages countries to opt for automatic information exchange, some jurisdictions have considered the withholding tax option that would not require information to be exchanged with the relevant EU Tax authorities.

The Cayman Islands Government has opted not to go with the withholding tax regime.

Director of CIFSA, Eduardo D'Angelo P Silva said his organisation thinks the Government made the right choice. “Should the Directive become fully implemented as planned in January 2005, we believe that automatic information exchange would be consistent with the Cayman Islands promotion of transparency in it’s financial services industry.”

According to CIFSA, Cayman would have no particular issues with sharing information because the jurisdiction does not encourage tax evasion. The Government also supports this view. Financial Secretary, the Honourable George McCarthy said, “We have always set a high standard of integrity and we do not intend to change that policy now,” said Mr McCarthy. “Information exchange would not pose a difficulty to the vast majority of our industry.”

Since the EU Commission introduced the proposed Directive, there has been active debate in Cayman and in other jurisdictions regarding whether the withholding tax, automatic information exchange or indeed some mix of the two would be in the best interest of their respective financial services industry.

The press release said CIFSA believes that the automatic information exchange would provide clarity and a greater degree of certainty to clients, and that that option has significant support across the financial services industry in general.

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