1 Connection Factors
1.1 To what extent is domicile or habitual residence relevant in determining liability to taxation in your jurisdiction?
There is no direct taxation in the Cayman Islands.
1.2 If domicile or habitual residence is relevant, how is it defined for taxation purposes?
See the answer to question 1.1.
1.3 To what extent is residence relevant in determining liability to taxation in your jurisdiction?
There is no direct taxation in the Cayman Islands.
1.4 If residence is relevant, how is it defined for taxation purposes?
See the answer to question 1.3.
1.5 To what extent is nationality relevant in determining liability to taxation in your jurisdiction?
There is no direct taxation in the Cayman Islands.
1.6 If nationality is relevant, how is it defined for taxation purposes?
See the answer to question 1.5.
1.7 What other connecting factors (if any) are relevant in determining a person's liability to tax in your jurisdiction?
None, as there is no direct taxation in the Cayman Islands.
2 General Taxation Regime
2.1 What gift or estate taxes apply that are relevant to persons becoming established in your jurisdiction?
There is no direct taxation in the Cayman Islands.
2.2 How and to what extent are persons who become established in your jurisdiction liable to income and capital gains tax?
See the answer to question 2.1.
2.3 What other direct taxes (if any) apply to persons who become established in your jurisdiction?
There are none.
2.4 What indirect taxes (sales taxes/VAT and customs & excise duties) apply to persons becoming established in your jurisdiction?
When taking up residence in the Cayman Islands, personal belongings moved within the first six months of residence are not subject to duty, as long as all items imported are used personal belongings that are over six months old, including computers, household goods and furniture (proof of purchase may be required if this is in question); and vehicles, alcohol and tobacco are not included in the duty exemption. Generally speaking, import duty is 22% of the sum of the market value of the possession, and the insurance and shipping costs of delivery to its destination in the Cayman Islands. Certain items, such as alcoholic beverages and luxury motor cars, suffer higher rates of import duty.
2.5 Are there any anti-avoidance taxation provisions that apply to the offshore arrangements of persons who have become established in your jurisdiction?
There are no anti-avoidance taxation provisions in the Cayman Islands.
2.6 Is there any general anti-avoidance or anti-abuse rule to counteract tax advantages?
No, there are no general anti-avoidance or anti-abuse rules in the Cayman Islands.
2.7 Are there any arrangements in place in your jurisdiction for the disclosure of aggressive tax planning schemes?
No, there are not.
3 Pre-entry Tax Planning
3.1 In your jurisdiction, what pre-entry estate and gift tax planning can be undertaken?
There are no estate or gift taxes in the Cayman Islands.
3.2 In your jurisdiction, what pre-entry income and capital gains tax planning can be undertaken?
There are no income or capital gains taxes in the Cayman Island
3.3 In your jurisdiction, can pre-entry planning be undertaken for any other taxes?
There is no direct taxation in the Cayman Islands.
4 Taxation Issues on Inward Investment
4.1 What liabilities are there to tax on the acquisition, holding or disposal of, or receipt of income from investments in your jurisdiction?
There is no direct taxation in the Cayman Islands.
4.2 What taxes are there on the importation of assets into your jurisdiction, including excise taxes?
Dutiable items accompanying the resident owner on his or her arrival in the Cayman Islands are exempt from duty as to the first CI$350 (approximately US$420). This tax-free exemption does not apply to goods imported that are not accompanied by the owner on his or her arrival or re-entry to the Cayman Islands. Unaccompanied imports suffer import duty, generally speaking, at 22% of the value plus shipping and insurance. Certain categories are zero or lower rated; most commonly items also for sale in the duty-free stores for the cruise ship passenger trade as well as, for example, some necessities. Equally, luxury items, such as alcoholic beverages and motor cars above a certain value, suffer higher rates of duty.
4.3 Are there any particular tax issues in relation to the purchase of residential properties?
There is no particular tax involved in the purchase of residential properties in the Cayman Islands other than a one-time stamp duty at time of purchase, which is currently 7.5% of the purchase price.
5 Taxation of Corporate Vehicles
5.1 What is the test for a corporation to be taxable in your jurisdiction?
There is no direct taxation in the Cayman Islands.
5.2 What are the main tax liabilities payable by a corporation which is subject to tax in your jurisdiction?
There is no direct taxation in the Cayman Islands.
5.3 How are branches of foreign corporations taxed in your jurisdiction?
There is no direct taxation in the Cayman Islands.
6 Tax Treaties
6.1 Has your jurisdiction entered into income tax and capital gains tax treaties and, if so, what is their impact?
There is no direct taxation in the Cayman Islands. The Cayman Islands has entered into a number of tax information exchange agreements and, strictly speaking, only one double tax treaty, with the United Kingdom.
6.2 Do the income tax and capital gains tax treaties generally follow the OECD or another model?
See the answer to question 6.1.
6.3 Has your jurisdiction entered into estate and gift tax treaties and, if so, what is their impact?
There is no direct taxation in the Cayman Islands.
6.4 Do the estate or gift tax treaties generally follow the OECD or another model?
See the answer to question 6.3.
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Originally published in ICLG
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
