WASHINGTON DC, United States, July 25, 2008 – The Cayman Islands has once again become the target of scrutiny by the United States as lawmakers continue their drive to stamp out off-shore tax havens.
This time, the US Senate has started delving into activities at an office building there to “examine whether many of those tenants are feasting at American taxpayers’ expense”, according to Democratic Senator Max Baucus, a member of the Senate Committee on Finance on Thursday.
The building, Ugland House, was the subject of an investigation by the US Government Accountability Office.
A report described how US citizens establish entities with relatively little expense in the Cayman Islands and other small nations to facilitate both legal tax minimization and illegal tax evasion. These entities can be used to obscure legal ownership of assets and associated income and to exploit gray areas of US tax law to minimize US tax obligations, it said.
“Balancing the need to ensure compliance with our tax and other laws while not harming US business interests and also respecting the sovereignty of the Cayman Islands and similar jurisdictions undoubtedly will be a continuing challenge for our nation,” the report added.
Washington tax evasion experts gave testimony before the committee as three other Caribbean islands came up for scrutiny: the British Virgin Islands (BVI), Nevis, and Belize.
The BVI has “more than 500,000 shell companies”, said attorney Jack Blum.
“It is important to understand that the structures are mere pieces of paper with no commercial reality,” he added, while insisting that offshore evasion is a massive threat to the US tax system.
“We cannot continue to treat entities without substance or purpose as real and expect our tax authorities to navigate their way around the obstacles. We must close the loopholes foreigners use to put money in the US market without leaving a trail.” (CaribWorldNews)