Anthony Travers, OBE, Chairman of Cayman Finance revealed the figures to illustrate the continuingly robust performance of a key sector of the financial services industry of the British Overseas Territory. He was speaking after a recent ill-informed comment in the UK media that the Cayman Islands will “wither on the vine” through lack of investment.
Reacting with bemusement at the reports Mr Travers pointed out that the Cayman Islands was actually flourishing in the current economic climate which, he said, was understandable given that no Cayman Islands financial institution failed in the financial meltdown. And the figures released by CIMA (Cayman Islands Monetary Authority) illustrate that, at the current rates of net monthly increase, there would be in excess of 10,200 fund registrations by the financial year end.
Mr Travers said: “This will exceed the all-time high watermark for the Cayman Fund Industry”
He also revealed the Territory’s zero percent Income Capital Gains and Corporate Tax was drawing particular interest from Britons thinking of leaving the UK.
He was speaking after recent reports described Cayman’s future as bleak. He said these reports “are surprising and fly in the face of the statistics“, noting that company incorporations for 2010 against 2009 were also showing a robust upward trend with increases of over 14 percent for Q1 and 24 percent for Q2. “It is more helpful to report on the actual numbers rather than the wishful thinking on the part of competitor jurisdictions”, he added.
Commenting on a statement in the UK press by Mr Mark Fleming, a fund manager with Tiburon Partners, Mr Travers stated “We trust Mr Fleming pays more attention to the performance of his funds than he does to the recent Cayman fund numbers”
“We take a statistical approach to these matters and will also look forward to comparing the performance metrics of our traditional and successful hedge fund product to the EU regulated ‘Newcits’ funds over the next couple of years. Monthly fund dissolutions in Cayman appear well within historical norms and do not evidence any trend towards redomiciliation. We would anticipate however that fund managers with a purely retail product will, in the immediate term create a Eurocentric model but Cayman has not historically provided a UCITS product.”
Mr Travers also indicated that Cayman was in the perfect position to benefit from the Capital Gains Tax increase in the UK. With CGT going up to 28 percent, an increasing number of investors are looking to move to Cayman.
Mr Travers said: “We have said all along that punitive tax measures in the UK and the rest of Europe will drive individuals and companies offshore.
Whilst we welcome this we are continually saddened that there is still a hard-line group of EU politicians who cannot grasp that low taxes stimulate economies and high taxes do exactly the opposite by creating less of everything, including very often, tax revenue. That is the basis for the success of the Cayman model.”
Mr Travers’ remarks have been backed up by Deloitte’s Lucy Hardwick who told The Sunday Times: “The increase in the CGT rate to 28 percent is a tipping point for many individuals. Some will be looking to relocate to another country to mitigate rates.”