Cayman Islands: Double Tax Treaties
This page was last updated on 28 June 2019.
Not having any taxes other than customs duties and stamp duty, the Cayman Islands did not, until recently, enter into any double tax treaties with other countries. It has, however, entered into limited tax treaties with the UK and New Zealand, and signed a comprehensive tax treaty with Japan in 2010 (see below) in addition to several tax information exchange agreements, which have ensured that the jurisdiction no longer features on the OECD's 'grey list' of territories which have not substantially implemented the internationally agreed tax transparency standard.
Cayman entered into a mutual legal assistance treaty with the USA, although the treaty specifically excludes financial matters. In March 2009, the Cayman Islands successfully concluded technical negotiations on a series of bilateral agreements with seven Nordic states, including tax information agreements, and went on to sign additional information agreements with G7 and OECD member countries in 2009 and 2010.
After the Cayman Islands was forced to accept 'information sharing' under the EU's Savings Tax Directive in 2004, the UK agreed to move discussion of a tax treaty between the United Kingdom and the Cayman Islands to the head of the queue.
In May 2006, the Cayman Islands Monetary Authority (CIMA) and the Office of the Superintendent of Financial Institutions Canada (OSFI) signed a memorandum of understanding that provides a framework for cross border cooperation between the two countries.
The MoU establishes a protocol for the sharing of information and protection of information shared, cooperation regarding on-site inspections carried out by one regulator on supervised financial institutions in the other jurisdiction, and ongoing coordination.
OSFI is responsible for regulating and supervising all federally chartered, licensed or registered banks and insurance, trust and loan companies, as well as cooperative credit associations and fraternal benefit societies in Canada. On 21 February 2008, a memorandum of understanding for the exchange of information and investigative assistance between CIMA and the FSA, the UK's national regulator of financial services and markets, was signed. The agreement provides a formal basis for cooperation between the two authorities.
The MoU is similar to the other agreements in place between CIMA and overseas financial regulators. It outlines the types of assistance that can be requested and given by CIMA and the FSA.
This includes: providing, confirming or verifying information; obtaining specified information and documents from other parties; discussing issues of mutual interest; questioning or taking testimony of persons designated by the requesting authority; arranging and/or conducting inspections of financial services providers; and permitting representatives of the requesting authority to participate in enquiries by or on behalf of the requested authority.
The MoU also outlines the procedure each regulator will use for making requests, and explains how requests will be assessed to determine if the required assistance can be given.
The agreement has provisions for the treatment of confidential information that each authority may receive under the MoU. Such non-public information can only be disclosed, the MoU states, "in accordance with disclosures permitted under its applicable laws, regulations and requirements".
In March 2009, the Cayman Islands and the seven Nordic countries, comprising of Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden, concluded technical negotiations on a series of bilateral agreements, including tax information agreements, at a meeting between the respective delegations held in Copenhagen on 5-6 March.
These were second round negotiations, the first round having taken place in the Cayman Islands on 17-18 April 2008.
The seven tax information agreements were signed in Stockholm in April 2009, after all countries had completed their individual administrative protocols.
The collateral commercial agreements, also signed in Copenhagen, were due to be signed at the Norwegian Embassy in Paris in mid-June.
The Cayman Islands Monetary Authority has also entered into MoUs with regulatory bodies in Brazil, Malta, Argentina, the State of Washington, Jersey, Isle of Man, Bermuda, Jamaica, Panama and the Turks & Caicos Islands.