Hon Kurt Tibbetts Leader of Government Business	Gordon Brown British Prime Minister

British Prime Minister Gordon Brown has instructed the Cayman Islands Government to meet international banking standards as outlined by the Organisation for Economic Cooperation and Development (OECD).

Underscoring his support of the G-20 push to improve international standards on tax transparency, Mr Brown sent a series of individualised letters to British Overseas Territories last Thursday 9 April, including one specifically addressed to Cayman Leader of Government Business, Hon Kurt Tibbetts.

The letter follows Cayman’s inclusion in a “greylist” of nations identified by the OECD as lacking in terms of compliance with international standards. The greylist was compiled during deliberations at a 2 April summit in London involving 19 of the world’s 25 most-developed nations and the European Union.

At that time, major governments, including the US, UK and France, reacted to popular pressure to move against offshore tax-havens. While some territories were blacklisted, only three international financial centres were categorised on a more-favoured “whitelist.” To the consternation of local authorities, Cayman was relegated to something in-between.

Minister for International Financial Policy, Hon Alden McLaughlin, had expressed his particular disappointment in the UK’s “administrative power”, which failed to provide appropriate support to Cayman. Now, however, Mr McLaughlin says there is good reason to find “encouragement” in the content of PM Brown’s letter.

He pointed to Mr Brown’s assurance that officials are “urgently working” to clarify whether Cayman’s “unilateral mechanism” (the programme by which Cayman banks share information with other nations) will be recognised and adopted as equivalent to customary Tax Information Exchange Agreements (TIEA) adopted by the OECD.

During a Sunday 12 April interview with Cayman Net News, Mr McLaughlin said the reference to Cayman’s unilateral mechanism and the effort to elicit clarification are positive indications.
“We have indication that this issue is under consideration and I’m optimistic that shortly, we shall see formal approval.”

He anticipates answers to come before a September convening of the UN General Assembly alluded to by PM Brown. The UN General Assembly, Mr Brown cautions, will impose a “tool box of sanctions” against nations who do not achieve a standard of 12 TIEAs.

“But we have more than met those standards,” stressed Mr McLaughlin noting the range of agreements Cayman has forged in terms of its unilateral mechanism.

The 30 OECD constituents include the US as well as Germany and Ireland, both of which signed unilateral tax information exchange agreements with the Cayman Islands in mid-March, subsequently endorsing the move as an explicit fulfilment of international obligations. Other unilateral agreements have been achieved with OECD members Austria, Belgium, the Czech Republic, Holland, Japan, Luxembourg, Slovakia, South Africa and Switzerland.

Furthermore, Cayman has signed OECD-approved bilateral agreements with five Nordic nations, two Denmark-dependent territories and the US.

If Cayman’s mechanism is recognised, our nation will have more than fulfilled the standards outlined by the OECD, assured Mr McLaughlin.

Meanwhile, he also emphasised that Government “isn’t just sitting around waiting and hoping” for favourable OECD response. “We are actively pursuing bilateral agreements with other countries, and we fully expect to achieve recognition of our standards,” said Mr McLaughlin.


The full letter from Prime Minister Brown to Hon Kurt Tibbetts is as follows:

Dear Mr Tibbetts

Recent developments - including those at the G20 - have underlined the importance of embracing international standards on tax transparency.

I am writing to you today to make clear my full support for the current initiatives and my belief that it is strongly in the interests of all - including Britain’s Overseas Territories and Crown Dependencies - to meet these international standards.

The Summit was an important opportunity for the G20 to discuss the global economic crisis and to consider what governments could do collectively to address the situation. I agreed with the other G20 leaders that international co-operation is necessary in a number of areas. One of these areas was on improved co-operation in the exchange of tax information, and ensuring that all jurisdictions meet internationally recognised standards on tax transparency.

I welcome the fact that many of you have made public statements re-committing yourselves to the OECD standards as confirmed also in letters sent to me and Treasury Ministers. I fully support these and believe it is strongly in the interests of all of us to ensure these standards are met quickly, and that all jurisdictions are treated equally.

I am aware of your unilateral mechanism for recognising countries with which you will exchange tax information, and’ have asked my officials to work urgently with the OECD to clarify whether this can be accepted as being equivalent to a TIEA.

It is particularly important that all Territories build on the current momentum and work toward meeting the international standard swiftly on the basis of agreements with the major nations represented in the G20, the EU and the OECD. We will continue to encourage our international partners in the OECD and EU to sign agreements with the Territories.

The UK Government has already provided entrustments to allow you to negotiate and conclude Tax Information Exchange Agreements with EU and OECD countries, while consulting us throughout the process. We remain committed to working in partnership and helping you make further progress. We will continue to offer assistance, where necessary, through practical advice on how best to meet the international standards.

Given the developments at G20 and, in particular, the identification of a tool box of sanctions which will be applied against those who do not meet the international standard, I would urge you to achieve the standard of 12 TIEAs or equivalent arrangements before the UN General Assembly in September.

Similarly, as international efforts on harmful tax practices start to refocus on the issue of tax avoidance, it will be vital to the interests of the Overseas Territories that they can readily meet the new international standards which may emerge.

Yours sincerely

Gordon Brown