Cayman Islands says 'not a tax haven'

The Cayman islands has been attacked for being a centre of tax evasion, but the head of its financial industry argues that it has been unfairly targeted.

In recent months the Cayman Islands has been labelled by some as a tax haven - but is that fair?

This description might suggest it is used for unlawful tax evasion, a charge the authorities there strenuously deny.

The Caymans is a British overseas territory in the Caribbean, three tiny islands about 500 miles south of Miami.

It has a tax rate of zero for corporation tax, income tax and capital gains tax, which draws some of the world's biggest banks and hedge funds to its shores.

Evasion claims

The Caymans are on a so-called 'grey list' of countries that have signed up to international tax standards, but have not fully implemented them.

And the territory has faced fierce criticism from a range of people, including President Obama and Robert Morganthau - who has been the Manhattan district Attorney for more than 30 years.

He told the BBC's Business Daily programme that companies could evade paying taxes by setting up shop in the Caymans. He went on to claim that historically, there'd been a lack of financial supervision and regulation in the Caymans.

This criticism from Mr Morgenthau has caused upset within the Cayman Islands.

Lesley Curwen spoke to Tony Travers, the chairman of the country's Financial Services Association. He said the accusations were mistaken, and that the country was not a centre of tax evasion.

First broadcast on 7 July 2009