Tax

Residence and domicile

How does an individual become taxable in your jurisdiction?

There are no income or capital gains taxes.

Income

What, if any, taxes apply to an individual’s income?

There is no income tax.

Capital gains

What, if any, taxes apply to an individual’s capital gains?

There is no capital gains tax.

Lifetime gifts

What, if any, taxes apply if an individual makes lifetime gifts?

Subject to certain exemptions, for example, where there has been a transfer of land for ‘love and affection’ between family members, stamp duty is payable in the Cayman Islands on gifts of land located within the Islands by the person receiving the gift.

Ad valorem stamp duty on the transfer of land is 7.5 per cent of the market value. First-time Caymanian purchasers of land are eligible for reduced rates of duty of zero to 2 per cent, depending on the value of the property being purchased and whether it is undeveloped land or developed property. The Minister of Finance is able to waive or abate the whole or part of the duty payable, and an application can be made for a waiver of stamp duty with respect to transfers that do not result in any change of beneficial ownership. There are also waivers of stamp duty when property passes because of natural love and affection between certain family members.

Inheritance

What, if any, taxes apply to an individual’s transfers on death and to his or her estate following death?

There are no estate taxes.

Real property

What, if any, taxes apply to an individual’s real property?

Other than stamp duty, referred to in question 4, there are no taxes applicable to real property in the Cayman Islands.

Non-cash assets

What, if any, taxes apply on the import or export, for personal use and enjoyment, of assets other than cash by an individual to your jurisdiction?

Imported items are generally subject to a 22 per cent import duty. This is subject to certain personal allowances. There are concessions on some goods, and certain items, such as coffee and books, are duty-free.

Other taxes

What, if any, other taxes may be particularly relevant to an individual?

There are no other applicable taxes, such as value added tax, in the Cayman Islands.

Trusts and other holding vehicles

What, if any, taxes apply to trusts or other asset-holding vehicles in your jurisdiction, and how are such taxes imposed?

There are no other applicable taxes in the Cayman Islands, except that on the establishment of a Cayman trust CI$40 stamp duty is payable. The income received by the trustees is not subject to any Cayman Islands tax. There are no Cayman Islands fiscal implications arising out of transactions entered into by trustees or distributions to beneficiaries.

Charities

How are charities taxed in your jurisdiction?

Charities are not taxed.

Anti-avoidance and anti-abuse provisions

What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?

Because the Cayman Islands does not impose any income, capital gains or estate taxes, the type of anti-avoidance provisions that are common to onshore jurisdictions are not present in the Cayman Islands. The Cayman Islands is, however, subject to various regulatory regimes that aim to prevent multinational tax avoidance. The Cayman Islands participates in the automatic exchange of information regimes provided by the US Foreign Account Tax Compliance Act and the Common Reporting Standard.

Economic substance legislation has also recently come into force, which requires certain ‘relevant entities’ that are registered and tax resident in the Cayman Islands and are carrying on ‘relevant activities’ to report on and satisfy the ‘economic substance test’ as prescribed in the legislation. However, private wealth structures are often unlikely to be subject to such requirements as the entities within these structures would typically not be carrying on any of the specified activities that trigger the requirements, or, if they do undertake such activities, the relevant entity will often be subject to reduced requirements, which can be satisfied through the maintenance of a registered office and the completion of mandatory filings.