On 18 February 2020, The European Union updated its List of Non-cooperative Jurisdictions for Tax Purposes. Although Cayman finalised its legislation earlier this year to regulate private investment funds and updated the Mutual Funds Law to complete the regulatory framework covering other collective investment vehicles, the EU determined that it failed to implement measures relating to economic substance in the area of collective investment vehicles within the agreed timetable and therefore “did not deliver on the commitment on time”, and in this respect was placed on the blacklist.

Crucially, this is a technical issue, and this does not reflect any concerns regarding the steps Cayman has taken to address the EU’s other concerns around fair taxation or transparency.

The Cayman Islands has taken decisive action over the past years to adhere to the global harmonisation of laws in the areas of transparency and international tax standards.

The EU accepted that the BVI had implemented the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline and was moved to the whitelist and removed from Annex II (or the so called grey list).

Harneys has issued a news release which can be found here.

The Cayman Islands’ government press release can be found here.

The EU’s press release is located here and the official notice is here.