In the Cayman Islands there are no taxes other
than import duties (at varying rates) and stamp
duty at rates up to 7.5% on transfers of most
real estate, 9.5% is charged for real estate
in prime locations. There is a 1% stamp duty
payable on mortgages of less than KYD300,000,
and 1.5% on mortgages of KYD300,000 or higher;
however issues of securities, mutual fund shares
or units are normally exempt from stamp duty.
See Types of Company
for details of annual fees payable by companies,
and Offshore Legal
and Tax Regimes for details of fees
payable by various types of financial institution
and in respect of listing on the Cayman Islands
Stock Exchange.
During
2003 the Cayman government battled to avoid
inclusion in the scope of the EU's Savings Tax
Directive, but in the end was forced to give
in by the UK Treasury, and applied the information
exchange model under the Directive from 1st
July, 2005. This means that information about
interest on savings paid to citizens of European
member states is being forwarded to the tax
authorities of the member state in question.
The
Cayman Islands authorities have put a brave
face on this development, which they tried hard
to avoid.
The
Cayman Island’s then Financial Secretary Mr
George McCarthy said: "International business
is attracted to the Cayman Islands because of
the critical mass of experienced professional
advisers, our robust and effective regulatory
system, innovative products and services and
an approach to tax which is business-friendly.
We have signed and implemented commitments on
tax transparency. We have consistently asked
for fairness - a level playing field and equitable
treatment. It is not a case of us asking to
be let into your ports 'for a bit of financial
raiding', but of the Cayman Islands correcting
decades of negative spin by competing onshore
financial centres."
In
return for Cayman's acceptance of the Directive,
the UK agreed to pursue discussions on a Double
Tax Avoidance Treaty.
A
new double taxation arrangement facilitating
tax information exchange that meets OECD standards,
was signed on June 15, 2009, by Stephen Timms,
then Financial Secretary to the UK Treasury,
and W McKeeva Bush, Leader of Government Business
in the Cayman Islands.
Cayman
Islands’ Financial Secretary, Kenneth
Jefferson on October 2, 2009, tabled an austerity
budget designed to tackle the significant challenges
the jurisdiction is facing as a result of the
financial crisis, which left the government
little choice but to increase a multitude of
taxes and fees. These included, among others,
annual company and general registry fees, mutual
fund licence fees, banking and trust licence
fees, insurance licence fees, securities and
investment business fees.
The
revenue measures were designed to raise an additional
KYD94.9m in revenues in 2009/10 and KYD126.4m
when they are in effect for a full 12-month
period.
In
March 2010, the Cayman Islands government welcomed
the general thrust of the conclusions of the
Miller Report, particularly its main recommendation
that the introduction of direct taxation in
the jurisdiction should be avoided.
The
Miller Commission was created by the Cayman
government in 2009 in response to the UK government's
concerns that the global economic and financial
crisis has damaged the territory's long-term
economic and fiscal health, given its reliance
on the international financial services industry.
In a statement, Cayman Premier, McKeeva Bush,
said that the proposals have been broadly accepted
as the way forward for the islands, and will
be instrumental in drafting final proposals.
Commenting
on the content of the Miller report, Bush noted:
“On
the first recommendation, that there should
be no introduction of direct taxation in the
Cayman Islands, it would be no surprise for
you to hear that we agree with this general
conclusion and believe that ideally new revenue
measures will need to be kept at a minimum for
the short- to medium-term. However, we are committed
to examining ways to broadening the revenue
base and we have given that commitment to the
UK. We received no indications during the meetings
that the FCO (UK Foreign and Commonwealth Office)
will be pushing for direct taxes, although this
is something that they would like for us to
continue to consider in our efforts to broaden
the revenue base.”
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