Steve McIntosh, CEO Cayman Finance, gave a refresher on the Global Minimum Tax, an initiative by G20 and OECD which aimed to “harmonise” a minimum tax level across nations and deal with profit shifting activity by multi-nationals with a revenue of more than Euro 750 million. Across the group, the company must pay at least 15% tax. If they do not pay 15% in any particular jurisdiction, then they must pay a top up tax which would be charged in another jurisdiction.

Cayman did not plan to implement any type of corporation tax of its own, so any companies that were affected and that had operations or entities in the Cayman Islands could potentially pay a top up in another jurisdiction.

The impact on Cayman would be minimal. Cayman’s financial services industry comprised of six main sectors, with funds and structured finance being taken out of the equation, having been already excluded, while trusts would not be affected because they were not companies. Banks made most of their monies from commercial loans and investments, and not with multi-nationals. That just left insurance companies, most of which were below the threshold. Just a very small number of reinsurance companies would possibly be affected.

“Overall, it’s not going to have a material negative impact on the financial industry,” Steve said.

Julian Morris, Economist, said what would happen in the future might have more of an effect. Cayman would only be significantly affected if they lowered the threshold or changed the rules.

“To the extent that the introduction of those taxes in some of the low tax jurisdictions causes issues for some of the companies, that might benefit Cayman in that Cayman remains a pure tax neutral jurisdiction,” he said, making Cayman more attractive as a domicile.”

Marla Dukharan, Economist and Leading Advisor on the Caribbean, worried that this might be used as another mechanism to point the finger at Cayman to say it was not doing what it was supposed to be doing.

“If they [The United States] are the largest tax secrecy jurisdiction on earth, then why would you concoct this entire global drama of making so many countries sign on to this GMT when you are looking at possibly 80 companies globally and $250 billion? I think it’s a bit of overkill. I think part of the reason why they have done this is really to make sure that they capture countries and hold us accountable for things that they don’t hold themselves accountable for.”

They were keen to penalise smaller, weaker jurisdictions, she feared.

Steve felt the implementation of the GMT system neutralised the criticism that Cayman was helping countries avoid tax.

“We can say we are fully compliant and I really think we will be because it’s not especially onerous. It gives us another string to our bow,” he said.

Steve Cayman’s business model was its best protection, in that it did not depend on tax structuring or tax avoidance. Cayman’s position had always been that tax on profits should be paid where those profits arose..

Steve furthered: “I think Cayman has a relatively – I hesitate to use the word but in certain sectors – a relatively unassailable position so long as we do things right. We can maintain that as long as we make good decisions and we do everything we can to maintain that position.”