Speaking at the annual AICPA CIIPA summit for accounting and finance professionals on Monday, Scott said, Cayman’s strong and transparent tax model “is directly under attack from Pillar Two”.

The Pillar Two proposal, developed by the OECD, is undergoing a public consultation process that ends on 2 Dec.

“We need to stand up and really involve ourselves in the process to show that the good model that we have is protected,” Scott said.

The Cayman Finance CEO took issue with a statement made in September by Pascal Saint-Amans, the head of tax at the OECD, that the aim of the organisation’s tax plans was “to kill zero-tax jurisdictions or to make sure companies wouldn’t be able to locate profits in zero-tax jurisdictions, where nothing is happening”.

Scott noted that statement reflected either a lack of understanding of zero-tax jurisdictions or a political directive to damage jurisdictions like Cayman and move business to other countries.

In its public consultation document, the OECD said Pillar Two, also known as the GloBE proposal, is expected to affect the behaviour of taxpayers and jurisdictions. “A minimum tax rate on all income reduces the incentive for taxpayers to engage in profit shifting and establishes a floor for tax competition among jurisdictions.”

Global action was needed, the Paris-based organisation claimed, “to stop a harmful race to the bottom on corporate taxes, which risks shifting the burden of taxes onto less mobile bases and may pose a particular risk for developing countries with small economies”.

Scott said the proposal created an immediate need to engage. Cayman Finance commissioned a study to explain Cayman’s tax neutrality in the international context.

The analysis finds, among other things, that Cayman’s tax neutral regime compares favourably to the benefits and costs of tax treaties.

Because Cayman does not charge any income tax, double taxation and tax conflicts that exist between tax treaties and domestic tax laws are eliminated. Tax base shifting through legal mechanisms also does not exist in Cayman.

Parties that transact through Cayman are still responsible for reporting and paying taxes in their home jurisdictions, Scott explained. “So, the fact that we are not adding an extra layer of tax does not in any way harm any other countries or their ability to assess and collect taxes,” he added.

In addition, Cayman achieves other objectives of tax treaties such as tax information sharing through bilateral tax information exchange agreements and the multilateral common reporting standard.

What Cayman’s tax neutrality is doing, for instance, to alternative investment funds or collective investment vehicles is normal in other countries, Scott said, but there it requires complex tax measures to ensure that they are pass-through entities that avoid double taxation.

The OECD’s Pillar Two proposal disregards all that, he noted. “It says we really could not care less.”

The OECD, Scott added, is seeking “to give unilaterally other countries the right to assess penalties purely on the basis that a zero- or low-income tax jurisdiction is involved in the process without considering whether those profits have been properly consolidated and properly reported and taxed in other jurisdictions.”

Fellow panellist Robert Moncrieff, a partner with EY based in the US, said because there is no tax levied in Cayman, one of the disadvantages of not having a treaty network is not having any protection against other countries imposing withholding taxes or levying other taxes.

The OECD proposal was “dressed up” to deal with the effects of the digital economy but “it is a significant threat”, Moncrief said. “It has nothing to do with taxation. It is about tax competition.”