Tax Evasion vs. Avoidance, as Seen From the Caymans

New York Times
May 14, 2012
Page A22 of the New York edition

To the Editor:

Re “These Islands Aren’t Just a Shelter From Taxes,” by Robert M. Morgenthau (Sunday Review, May 6):

As he did during a long and distinguished career as Manhattan district attorney, Mr. Morgenthau continues to conflate illegal tax evasion and lawful tax avoidance.

The allegations of bank secrecy in the Cayman Islands are the purest nonsense. Since 1990, the Justice Department has had full access to any account in Cayman in relation to all crimes and anti-money-laundering efforts, and following a 2001 treaty with the United States, the same access has been extended to the Internal Revenue Service. Further, it is American tax law that provides for American corporations to defer taxation by reinvesting overseas.

We could also usefully drop the implication that the number of registered offices located in the Cayman Islands has something to do with impropriety. As with the 217,000 registered offices located in one building in Delaware, international financial transactions tend to locate the domicile of the corporation in the jurisdiction with the most effective corporate legislation.

Lastly, the anti-money-laundering legislation in the Cayman Islands requires a hard copy of the ownership and directorship of every account. If Mr. Morgenthau wishes to advance the interests of international transparency, perhaps he should ensure that similarly effective legislation is introduced in Delaware, Wyoming and Nevada.

Articles like this are not merely unfair to the Cayman Islands; they also prevent focusing on the true nature of the problem — the tax deferral provisions of United States law.

Chairman, Cayman Islands Stock Exchange
George Town, Grand Cayman, May 8, 2012