Industry Update: Cayman Islands “Blacklisting” by the European Union

The European Union has on the 18^th of February, ‘blacklisted’ the Cayman Islands as a non-cooperative jurisdiction for tax purposes. This action was taken despite concerted efforts of the Cayman Islands Government to comply with every European Union initiative, including enacting more than 15 separate pieces of legislation designed to comply with EU criteria over the past two years alone.

It appears the ‘blacklisting’ arose as a result of two recent pieces of legislation, the Private Funds Law and the Mutual Funds (Amendment) Law which came into force on the 7^th of February 2020, however, the passage of these laws came three days later than expected by the European Union’s Code of Conduct Group who met on the 4^th of February. On the basis those two particular laws were not yet enacted into law, the European Union’s Code of Conduct Group recommended to the European Finance Minsters that the Cayman Islands be ‘blacklisted’ for failing to “…deliver on their commitment on time..” with respect to such legislation.

The Cayman Islands Government has to date issued two public statements on this matter since the ‘blacklisting’ occurred. They are fully committed to working closely with the European Union to remove the Cayman Islands from the ‘blacklist’ as soon as possible.

If you have any concerns on the above please direct your inquires to Huw Moses, HSM’s Managing Partner at hmoses@hmsoffice.com. We will continue to provide updates as and when they occur, but we do not expect this event to negatively impact our clients and are confident the jurisdiction will be removed from this list in due course.