The communiqué issued at the conclusion of the Group of Twenty (G20) summit in London on 2 April, 2009 included a renewed commitment by the G20 (which is comprised of the 19 largest national economies, the European Union, the IMF and the World Bank) to the standards of tax transparency and exchange of information in tax matters established by the OECD’s Global Forum of Taxation almost a decade ago. As evidence of this renewed commitment, the G20 leaders, through the OECD’s Global Forum, published three lists of jurisdictions; those who have substantially implemented the standards (the “white list”); those who have committed to implementing the standards (the “grey list”); and those who have not yet committed (the “black list”).  

Recognising Cayman as a jurisdiction which has committed to implementing the standards, Jeffrey Owens, the Director of the OECD’s Centre for Tax Policy and Administration, noted ahead of the G20 summit that “the Cayman Islands was one of the first jurisdictions to commit to the new standards in May 2000” when it entered into a bilateral tax information exchange agreement (TIEA) with the United States. Since then, Cayman has concluded TIEAs with a further seven countries based on the Model Agreement on Exchange of Information on Tax Matters which it, along with 10 other jurisdictions, assisted in preparing and, in 2008, introduced legislation to permit the unilateral provision of tax information which Mr Owens noted was “innovative and could speed up the process of implementing the standard”. With a total of 12 countries currently scheduled to the unilateral mechanism, Mr Owens went on to comment that he appreciated “the fact that the Cayman Islands has sought to simplify the means by which to broaden its information exchange relationships. The Cayman Islands is setting a good example”.  

With the OECD set to complete its review of Cayman’s enabling legislation within the next few weeks, it is widely expected that, with tax transparency arrangements concluded with 4 of the G7 nations, 17 of the 30 OECD member states and bilateral treaties in place with all 27 EU nations pursuant to measures equivalent to the European Union Savings Directive, the Cayman Islands will progress to the white list at the first opportunity.  

The outcome of the G20 summit represents a material change in the opinion of the major economic powers as to the vital role that smaller international financial centres (IFCs), such as the Cayman Islands, have to play in the global movement of capital. By recognising the internationally agreed standards of transparency and cooperation which exists in Cayman, the G20 leaders have, at long last, publicly recognised that the smaller IFCs are legitimate participants in global financial markets and the provision of global financial services. By 7 April 2009, less than a week after the publication of the black list, the Secretary General of the OECD, Angel Gurria, announced that the four jurisdictions featured on the black list (Costa Rica, Malaysia, Philippines and Uruguay) had provided commitments to the OECD to introduce tax transparency and information exchange sufficient for each of them to be removed to the grey list.