Cayman Islands: Domestic Taxation
Domestic Corporate Taxation
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% 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.