To receive
monthly updates on new features in lowtax.net
and tax-news.com just enter your e-mail address
below:
Daily
Tax Quote
New On The Network Today
This feed is published daily with selected new or updated
content from across our network. For a list of network sites, many of
which feature daily news, see below.
Providing essential tax news and information for globally
mobile artists, contractors, entrepreneurs, professionals, small businesses,
sportspersons and entertainers.
Lowtax Network Sites
Lowtax Network Portal:
'Low-tax' business and investment in the top 50 jurisdictions covered in
exceptional detail.
Tax News: Global
tax news, continuously updated through the day.
Law & Tax
News: Daily news and background data on tax and legal developments
for international business.
Offshore-e-com:
A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library:
One of the web's largest and most authoritative business and investment
information sources.
US Tax Network:
The resource for free online US taxation information, covering: corporate
tax, individual tax, international tax, expatriates, sales and e-commerce
tax, investment tax.
NEW! Personal
Business Tax Guide: Providing essential tax news and information
on business for contractors, entrepreneurs, professionals, small businesses,
artists, sportspersons and entertainers.
The
Cayman Islands Government has constructed
a regulatory regime that is highly
favourable to offshore operations,
especially since there is no taxation
in Cayman other than stamp duty and
import duties (see Direct Corporate Taxation). There
are more than 94,000 companies
registered in Cayman, along
with about 270 banks and nearly 800
insurance companies. See Law
of Offshore for a detailed
treatment of the legal regimes for
Banking, Insurance, Trust Management
and Mutual Funds. In this section
offshore corporate forms are summarised,
along with details of the fees payable
by the various types of financial
institution.
In
June 2000, the Cayman Islands was
identified by the FATF as non-cooperative
in the fight against global money
laundering. The result of this is
that the Cayman Islands was one of
fifteen tax jurisdictions placed on
a blacklist. Each offending tax haven
had a year in which to correct its
tax regulations and legislation. The
FATF released its next annual report
in June 2001, in which the organisation
revised its list of countries and
territories deemed non-cooperative.
Only four were removed from the list,
including the Cayman Islands (the
other three being the Bahamas, Liechtenstein
and Panama). The Cayman Islands was
praised by the FATF for its substantial
efforts to conform to forty recommendations
set out by the FATF in a code of good
practice governing money laundering.
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 began applying
the information exchange model under
the Directive from July 1, 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 Islands Tax Information Authority
(TIA) released statistics in September
2009 showing that while the number
of reports made to European Union
member states under the savings tax
directive increased in 2008, the amount
of savings income reported fell.
The
largest number of reports on accounts
based in the Cayman Islands were sent
to the French tax authority, with
2,159 having been sent in 2008 (an
increase from 1,579 in 2007), followed
by the United Kingdom with 1,643 (up
from 1,283 in 2007). However, the
USD13m in savings income reported
to the UK was substantially higher
than the USD1.2m reported to the French
authorities, although money reported
to the UK dropped by USD9m in 2008
compared to the 2007 figures.
The
second highest aggregate amount of
savings income was reported to the
Netherlands (USD5.8m) from 47 reports.
In
total, 5,679 reports were made to
EU member states by the TIA on USD25.7m
in savings income held in the Cayman
Islands. The number of reports increased
by 1,817, but total savings income
reported decreased by USD10m on 2007.
The
International Monetary Fund has observed
"substantial progress" by
the Cayman Islands with regards financial
sector regulation in its latest report
on the jurisdiction, published in
December 2009.
Progress
areas identified include changes to
legislation, rules and guidance to
meet international standards, increases
in the Cayman Islands Monetary Authority’s
(CIMA) independence, resources and
efficiency, as well as increased transparency
of the funds sector arising from the
implementation of CIMA’S electronic
reporting system. The report makes
recommendations for enhancements in
10 areas but acknowledges that these
recommendations “are broadly
consistent with the priorities already
identified by the authorities and
in most cases where policy action
is already underway.”
The
report is based mainly on information
obtained during the IMF’s March
2-13 mission to the Cayman Islands,
and on subsequent consultations with
CIMA. The mission’s purpose
was to review developments in Cayman’s
supervisory and regulatory framework
since the first assessment in October
2003.
Cayman
Premier, McKeeva Bush, welcomed the
report: “Once again we have
an external assessment that gives
evidence of this jurisdiction’s
commitment to providing sound regulation
in line with the best international
standards. We voluntarily participated
in this assessment and welcome any
others that are objective as we are
confident that our financial industry
and the supervisory regime can stand
up to any scrutiny. The government
broadly accepts the recommendations
and it is our intention to give priority
to implementing them in a timely manner,
as far as best serves this jurisdiction
and contributes to the stability of
the global financial system.”
CIMA’s
Chairman, George McCarthy, said the
report “reflects the high standards
that CIMA strives to meet and the
seriousness with which the Authority
takes its role.”
The
main recommendations contained in
the IMF report are to:
Strengthen
the legislative structure for the independence
of CIMA, beginning with passage of the pending
draft amendments to the Monetary Authority
Law;
Conduct
a formal risk assessment and focus CIMA’s
supervisory efforts more directly on the
key risks facing the jurisdiction, such
as operational and reputation risk;
Formalize
and validate the assumptions underlying
CIMA’s supervisory approach that relies
on the strength of supervision applied elsewhere
and the contribution of licensees and other
domestic professionals to the oversight
of financial intermediaries;
Formulate
a robust framework for supervising licensees
cross-border and cross-sectorally to help
prevent regulatory arbitrage or supervisory
gaps;
Draw
up contingency plans to handle the failure
of important institutions;
make
CIMA’s enforcement powers consistent
across all administered legislation and
set the monetary penalties high enough to
make them effective and dissuasive;
Review
the human resource budgeting policy and
reassess the process regularly to ensure
the continued adequacy and quality of regulatory
resources;
Monitor
international developments to ensure that
the regulatory regime in the jurisdiction
incorporates elements of international best
practice as it evolves;
Enhance
regulatory reporting and disclosure requirements
of financial entities; and
Implement a risk-based solvency regime for
the insurance industry.
In
April 2009, the Cayman Islands Financial
Services Association denounced the
OECD’s decision to ‘grey’
list the Cayman Islands despite its
evident commitment to the OECD standard.
“The
Cayman Islands Financial Services
Association is extremely disappointed
to see the inclusion of the Cayman
Islands in the OECD ‘grey’
list. It had been hoped that the OECD
would undertake a rational objective
analysis of the tax transparency established
by the Cayman Islands over the past
decade. In reverting to its political
origins, the OECD has not improved
its credibility and indeed in acting
in an arbitrary and prejudicial manner
raises questions about the value that
is attributed by the G20 to the cooperation
in tax and criminal matters that the
Cayman Islands has demonstrated.”
“The
Cayman Islands has full and relevant
tax transparency not only with the
United States under the November 2001
Tax Information Exchange Agreement
but proactive reporting with 27 European
Union nations under the 2005 European
Union Savings Tax Directive, the figures
for which, not incidentally, show
monetarily and fiscally insignificant
deposits by European residents in
the Cayman Islands. However, according
to the OECD the Cayman Islands finds
itself characterized with the wholly
non-compliant nations, which are the
root cause of the current tax evasion
furore. The determination by the OECD
to ignore the unilateral mechanism,
which is well respected by a number
of OECD members, shows the OECD still
applies a double standard which clearly
has nothing whatsoever to do with
the good faith disclosure of information
in tax matters, assuming that Cayman
Islands financial institutions have
anything of interest to disclose.”
“However
we are encouraged to see that the
OECD has now set an objective test
for positioning on the ‘white’
list which is less than the total
number of tax exchange arrangements
that the Cayman Islands currently
has in place. Accordingly, since the
Cayman Islands government has throughout
maintained its commitment to execution
of further bilateral treaties, assuming
its approaches are met in good faith,
we anticipate that the OECD will be
obliged to remove Cayman from its
current list swiftly.”
The
Cayman Islands has subsequently been
promoted to the OECD 'white list.'
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
Cayman Islands Legislative Assembly
on December 2 passed the Money Services
Amendment Bill, 2009, which amends
fees payable by financial services
businesses.
The
effect of the amending legislation,
coupled with associated Regulations
that the Cabinet passed on December
1, will be to:
Increase
the annual license fee payable by money
services businesses to KYD10,000 (USD12,345);
Introduce
an annual fee of KYD1,000 for each additional
subsidiary, branch, agency or representative
office that a money services business operates;
and
Introduce
a new transaction fee payable to the government,
equal to 2% of the gross amount transferred
overseas by a money services business on
behalf of its customers. However, such a
fee cannot exceed KYD10 per transaction.
"The
government made a deliberate decision
to limit the fee to a maximum of KYD10
recognizing that the majority of persons
transferring funds overseas are lower-paid
employees,” explained Financial
Secretary Kenneth Jefferson.
“The
Money Services Law makes it clear
that banks, building societies and
cooperative societies do not fall
within its ambit. Hence, wire transfers,
drafts and overnight funds in the
banking system are not subject to
the new transaction fee,” he
added.
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 last year 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 a healthy 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.”
Banks,
insurance companies, mutual funds,
trust management companies and other
financial institutions use an appropriate
corporate form from the above list;
in addition they are subject to registration
or licensing as described in Offshore Business
Sectors.
Cayman
Islands Fees Payable by Financial Institutions
Banks and Trust Companies (ie companies
providing trust services) are licensed
under the Banks and Trust Companies
Law 1995 as amended and pay annual fees
as follows:
Class
A License (unrestricted domestic
and offshore banking): from CI$600,000
Class
B License (offshore banking; and
trust companies): from CI$60,000
Class
B Restricted Banking License (business
dealings restricted to a list of
specified persons): from CI$37,000
Trust
Company License: from CI$60,000
Restricted
Trust Company License: from CI$7,000
Insurance
companies are licensed under the Insurance
Law 1979 as amended and pay annual fees
as follows:
Class
A License (Domestic insurance business):
CI$530,000
Class
B License (Offshore insurance and
reinsurance): CI$8,500
Class
B Restricted License (Captives):
CI$8,500
Mutual
funds and their administrators are licensed
under the Mutual Fund Law 1996 and pay
annual fees as follows:
A
licensed mutual fund administrator
pays CI$20,000 for up to 50 administered
funds and CI$20,000 thereafter;
A
restricted mutual fund administrator
pays CI$7,000;
Mutual
funds pay CI$3,000.
The
initial and annual fees for listing
on the Cayman Islands Stock Exchange
are as follows:
Specialist
Debt: USD3,500 and USD1,500 thereafter;
Eurobonds:
USD3,500 and USD1,500 thereafter;
Debt
Programmes: USD3,000 and USD1,500
thereafter;
Mutual
Funds: USD2,500 and USD2,500 after
the first year (subsequent annual
fees rise according to the shares
classes/sub funds/ series);
Depository
Receipts (sponsored): USD3,000 and
USD4,000 thereafter;
Derivative
Warrants: USD3,500 and USD1,500
thereafter;
Equity
Securities: USD5,000 to USD10,000
(depending on value of securities)
and USD7,000 thereafter;
Debt
Securities: USD4,000 and USD2,000
thereafter;
Secondary
listings: USD2,000 and USD2,000
thereafter.
NB:
Fees charged by listing agents are a
separate matter; the above fees are
simply set annual dues. The charges
of a listing agent are likely to be
in the CI$5,000 neighbourhood.
In
January 2007, amendments revising the
Cayman Islands Immigration Law (2006
Revision) came into force. The Law contains
a number of changes to the Immigration
Law, 2003, including work-permit term
limits, permanent residency, a new category
of 'key employees' and the ability of
the Chief Immigration Officer to grant
Caymanian Status to certain categories
of applicants. The new law sought to
clarify the work permit rules after
years of frequent change to the rules,
resulting in confusion for employers
and backlogs in the processing of work
permit applications.
Foreigners
without Caymanian status seeking employment
must apply for a work permit from the
Immigration Department. Not all applications
are successful. Work permits are generally
valid for up to three years, or for
up to five years in the case of domestics,
teachers, doctors and ministers of religion.
Five-year permits can also be granted
to holders of certain positions that
have been approved under a 'business
staffing plan,' which the board now
requires from firms employing 15 or
more foreigners. Seven years is the
maximum length of time a work permit
holder can work continuously in the
Cayman Islands, although, in certain
in exceptional circumstances, a worker
may be designated as an 'exempted employee'
in a business staffing plan. Caymanian
status is granted on a quota basis to
citizens from the UK and British Dependent
Territories, and certain other countries
including the US, Eire, Australia and
New Zealand.
In
January 2010, Cayman Prime Minister
McKeeva Bush announced that an
amendment to the immigration law
had been drafted to encourage
foreign financial services companies
to remain in the jurisdiction.
Bush
said that the government was fast
tracking legislation to ease immigration
laws imposed on those employed
in the financial services sector.
Under the proposed legislation,
foreigners will be allowed to
the island for extended periods,
and the amount of time that they
are required to reside outside
of the territory after the expiry
of their permit will be reduced.
In
a statement welcoming the decision,
Cayman Finance said that it "fully
endorses the positive steps the
government is taking to strengthen
the Cayman economy and its financial
services industry in these more
challenging economic times."
On
April 28, the Cayman Islands parliament
passed the Immigration (Amendment)
Bill 2010. This permits 25-year
residence to wealthy individuals
who invest in businesses that
contribute to the prosperity of
the islands, on certain conditions.
The
new legislation introduces the
opportunity for foreign individuals
to apply for a Residential Certificate
for Investment. While this will
cost KYD20,000 (USD24,000), it
allows the investor, their spouse
and any dependents the right to
live in the islands without the
need for a work permit on certain
conditions. Under the new law,
investors must:
Have
a net worth of at least KYD6m;
Invest at least KYD2.4m in licensed
businesses with workforces comprising
of at least 50% Caymanians,
that contribute towards the
prosperity of the territory;
Pass checks on business competence,
show financial records of their
businesses’ stability,
and show they undertake a managerial
role in their given area; and
Possess a clean criminal record
and be of sound health with
adequate health insurance.
Bush
underscored that the Residential
Certificate for Investment would
not incorporate a Trade and Business
License and, if necessary for
operations, this would need to
be applied for separately.
The
island’s Immigration Law
previously contained provisions
to allow residence to wealthy
investors but these were retracted
as the islands received little
interest.
One of the web's largest and
most authoritative business and investment information sources. Alongside
topical, daily news on worldwide
tax developments, you can receive weekly newswires or
access up-to-date intelligence
reports on a range of legal, tax and investment subjects.
Our 16 constantly updated
intelligence reports cover every important aspect of 'offshore' and international
tax-planning in depth, including banking secrecy, the EU's savings tax
directive, offshore funds, e-commerce, offshore gaming and transfer pricing.
Reports are available for immediate downloading or as subscription
services with news pages.
Advertising & Marketing
With over 50,000 qualified readers every month our web-sites
offer a number of cost effective, targeted advertising,
sponsorship and marketing opportunities:
Display advertising - from 'skyscrapers' to 'buttons'
Content/article submission and sponsorship
Opt-in email marketing
On-line Services Directory listings
Could your corporate web-site or newsletter benefit
from incorporating regularly updated news and content
tailored to serve your clients' interests? We can provide
a variety of maintenance-free news and content solutions
that can be seamlessly integrated and dynamically delivered:
IMPORTANT NOTICE: THE LOWTAX NETWORK
has taken reasonable care in sourcing and presenting the information contained
on this site, but accepts no responsibility for any financial or other loss
or damage that may result from its use. In particular, users of the site are
advised to take appropriate professional advice before committing themselves
to involvement in offshore jurisdictions, offshore trusts or offshore investments.
All materials on this site copyright THE LOWTAX NETWORK 1999 to 2010.
All content on this site
has been provided by BSIRN.