The Cayman Islands has seen a rise in foreign workers despite increasing levies they pay and announcing plans to lift the lid on the tax haven.The British overseas territory saw its number of foreign workers increase from 19,927 at the end of 2011 to hit almost 21,000 by December 2012, according to the latest figures.
The higher numbers are mainly due to the relaxation of immigration laws which included new five and 10-year work permits for those working in the reinsurance industry.
The Cayman Islands’ government has also started offering work permits for foreigners investing in its property sector.
These measures have more than helped counteract any expected fall in foreign workers due to a hike in work permit fees.
Last July, the then Cayman Islands premier McKeeva Bush announced controversial plans for a tax on expats’ salaries. But this was scrapped for fear of scaring off investors and workers, so work permit fees were increased as a consolation.
The rising foreign worker numbers also come at the same times as the Cayman Islands slowly lifts its cloak of secrecy which could result in billions of pounds leaving the territory.
The Cayman Islands have long been seen as a tax haven for the wealthy and secretive thanks to its light money laundering and disclosure rules. Monies held there also enjoy freedom from income tax, along with capital gains and corporation tax.
But pressure is mounting on the world’s fifth largest financial centre to be more transparent and open about investors’ cash to bring it in line with the likes of London, Switzerland and the Channel Islands, which have all introduced greater accountability.
In response the Cayman Islands Monetary Authority is introducing reforms that will make public the names of thousands of companies and their directors that have previously remained secret.
The territory is home to thousands of trust companies, countless financial vehicles along with most of the world’s hedge funds.
One British expat, who has recently left the Cayman Islands, said: “A lot of the pressure for more transparency is coming from investors who want greater control over their money along with knowing where it is being invested.
“The Cayman Islands has a very strong reputation as the ultimate tax haven so this could harm the financial industry quite badly. The dilemma for these funds is where to move their money to as all major financial centres are being forced to be more transparent.”
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