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Offshore Updates

Cayman Islands removed from EU list of non-cooperative jurisdictions

The European Union (EU) announced on 6 October the removal of the Cayman Islands from its list of non-cooperative tax jurisdictions. The list is a tool of the EU that aims to tackle external risks of tax abuse and unfair tax competition in low and tax neutral jurisdictions.

Greg O’Driscoll, partner, head of asset management at Grant Thornton Cayman Islands, says, “Being removed from the list was crucial and allows Cayman to continue to be the leading offshore jurisdiction, with now over 25,000 registered funds.”

Cayman was initially added to the EU list in February 2020 in relation to investment funds supervision.

“It is our understanding that a relatively small delay in passing the Private Funds Law (PFL) was the main cause for the Cayman Islands being included in the list. The recent implementation of the PFL (for closed end funds), the Mutual Funds (Amendment) Law and certain regulatory rules now ensures the financial regulator - Cayman Islands Monetary Authority (CIMA) - has the legal mandate to supervise all Cayman-based investment funds. This is good news for the alternatives industry, given the importance of the Cayman Islands as a fund and services center globally.”

“The Cayman Islands Government, CIMA and the private sector have been fully committed to any actions required for de-listing. The Cayman Islands have been at the forefront of tax transparency in the asset management industry, and the EU’s decision is a recognition of the jurisdiction meeting the most stringent conditions. We are delighted at today’s EU listing decision.”

The EU list was set up in 2017 after revelations of widespread tax evasion and avoidance schemes. Those on the list face reputational damages, higher scrutiny in their financial transactions and risk losing EU funds.

Source: Grant Thornton Cayman Islands.