Senators tell new US treasury secretary nominee to eliminate Cayman Islands and other tax havens
WASHINGTON, USA — Members of the United States Senate, questioning the new Trump administration nominee for Treasury Secretary on Thursday, asked Steve Mnuchin how he intends to close down Caribbean tax havens, specifically naming the Cayman Islands.
The Senate panel demanded details on how the new secretary expects to close the tax loopholes that allow American entities and individuals to use foreign subsidiaries in zero-tax jurisdictions to avoid taxable events.
The senators, in their questioning, focused upon the Cayman Islands, as well as the more obscure tax haven of Anguilla, in showing their displeasure of what they clearly indicated was abuse of American tax laws.
Details have recently emerged how financial service professionals working in the Cayman Islands intentionally use combinations of jurisdictions, like forming a BVI company, owned by a Belize trust, to create a totally opaque, non-transparent vehicle, tax-free, with no identifiable beneficial owner.
In the aftermath of the Panama Papers scandal, members of the Senate and the House of Representatives have affirmed the immediate need for effective tax reform, whether through new legislation or Treasury regulations, to eliminate the present situation. They appear to be looking for the incoming Treasury Secretary for a solution. Political pressure is clearly present on this matter.
What will an end of offshore tax advantages for US taxpayers mean to the Cayman Islands, as well as other Caribbean financial centres that do not impose taxes upon profits? Will investors and the hedge fund industry flee Grand Cayman, completely torpedoing the local economy and plunging the island into a major depression, requiring financial aid from the UK?
