OECD blesses Cayman’s ‘economic substance’ rules

Cayman’s tax regime has been deemed as “not harmful” to other countries in a review by the Organisation for Economic Co-operation and Development. The territory was one of a dozen low- or zero-tax jurisdictions put under the microscope by the OECD.

Cayman Finance welcomed the news in a press release Friday, stating:

“Cayman Finance is pleased to note that the Organisation for Economic Co-operation and Development (OECD), has completed a review of the Cayman Islands’ domestic legal framework that includes economic substance legislation, and found that the Cayman Islands tax neutral regime is not harmful and meets all economic substance requirements.

“The review was conducted by the OECD Forum on Harmful Tax Practices (FHTP) in June 2019. Cayman was one of 11 jurisdictions assessed during this round of reviews.

“As part of the Inclusive Framework, the FHTP will annually review changes in the legal framework, as well as the implementation of safeguards and enforcement measures in practice,” according to the news release.

“As a premier global financial hub, it is important that international standard setting bodies, like the OECD, have reviewed Cayman’s legal framework and independently reaffirmed that we meet all of the relevant international requirements and that Cayman’s tax neutral regime does not pose harm to other countries’ tax bases,” said Cayman Finance CEO Jude Scott.

“We continue to support the work of the Cayman Islands Government that ensures the Cayman Islands meets all relevant international standards implemented by the OECD,” he added.