The Cayman Islands has strongly refuted ABC News' claim that it is "a notorious tax haven" that operates in secrecy. The accusation was made in a news report in which the network claimed Republican presidential candidate, Mitt Romney, took advantage of the Cayman Islands' offshore accounts to deposit some of his personal funds and that of Bain Capital, which he once headed. The report said the Cayman offshore banking facilities were used as a tax loophole available only to the "super rich."
Responding to the report, Cayman Finance and the Cayman Islands government have taken ABC to task. Cayman Finance said ABC displayed a total misunderstanding of the role of the Cayman Islands' tax neutral framework, and in a statement the government said the networks' allegations of secrecy in its dealings as an offshore jurisdiction were unfounded.
According to a report by the Cayman News Service, a Washington lawyer told ABC News that if an American or an American corporation maintained a Cayman corporation the Cayman Islands would not report any income made to the U.S. government. ABC News also claimed Bain Capital had set up some 138 secret offshore funds in the Caymans.
The Minister of Finance of the Cayman Islands, McKeeva Bush, contradicted the report saying the Cayman Islands is not a secrecy jurisdiction that facilitates the avoidance or evasion of taxes by U.S. nationals. The minister said the Cayman Islands shares financial and other confidential information with the International Revenue Service (IRS) and other U.S. federal agencies through various agreements with the U.S. Government, including information requested for purposes of enforcing U.S. income tax laws.
Cayman Finance Chairman Richard Coles said the ABC report displays misunderstanding of the role of the "Cayman Islands' tax neutral framework." He said all international investors in the Cayman Islands are ultimately responsible for paying taxes in their home country under those countries tax laws and nothing in Cayman Islands laws interferes with that. He also said the Cayman Islands are involved in initiatives that encourage full cooperation with U.S. authorities in the area of international cooperation on tax matters, including a 2006 bilateral mutual legal assistance treaty, and the Cayman Islands' involvement with the Organization for Economic Cooperation and Development (OECD) Global Forum which focuses on tax information exchange.
The financial minister's statement indicated Cayman's legal, regulatory and judicial framework has been commended for its high standard in tax information by the OECD and other international organizations, and also recognized by the U.S. Department of Justice and the IRS for its high level of cooperation with U.S. law enforcement efforts. He said the Cayman Islands has been described by the Justice Department as one of the department's best partners among offshore jurisdictions.