2015/16
FOREWORD A country's tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. As you will appreciate, the production of the WWTG is a huge team effort and we would like to thank all tax experts within PKF member firms who gave up their time to contribute the vital information on their country's taxes that forms the heart of this publication. The PKF Worldwide Tax Guide 2015/16 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world's most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2015, while also noting imminent changes where necessary. On a country-by-country basis, each summary such as this one, addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country's personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Services provided by member firms include: Assurance & Advisory; Financial Planning / Wealth Management; Corporate Finance; Management Consultancy; IT Consultancy; Insolvency - Corporate and Personal; Taxation; Forensic Accounting; and, Hotel Consultancy. In addition to the printed version of the WWTG, individual country taxation guides such as this are available in PDF format which can be downloaded from the PKF website at www.pkf.com PKF Worldwide Tax Guide 2015/16 1
IMPORTANT DISCLAIMER This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a family of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. PKF INTERNATIONAL LIMITED JUNE 2015 PKF INTERNATIONAL LIMITED All RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION PKF Worldwide Tax Guide 2015/16 2
STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX OTHER TAXES STAMP DUTIES CUSTOMS DUTIES BUSINESS LICENCES AND FEES B. PERSONAL TAX C. TREATY AND NON - TREATY WITHHOLDING TAX RATES PKF Worldwide Tax Guide 2015/16 3
MEMBER FIRM For further advice or information please contact: City Name Contact information George Town Ben Leung +1345 945 5889 bleung@pkfcayman.com BASIC FACTS Full name: Cayman Islands Capital: George Town (Grand Cayman) Main languages: English Population: 53,737 (July 2013 est. index mundi) Major religion: Christianity Monetary unit: Cayman Island Dollar (KYD) Internet domain:.ky Int. dialling code: +1345 KEY TAX POINTS The Cayman Islands levies no tax on income or capital gains. Government revenue derives mainly from stamp duties, customs duties, business licenses and fees. Individuals are not subject to any inheritance tax or gift tax. The Cayman Islands has no tax treaty with any other country. A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX The Cayman Islands levies no taxes on income. Companies incorporated in the Cayman Islands are governed by the Companies Law and its amendments. This also regulates foreign corporations with a place of business in the islands. An ordinary resident company is used for doing business locally and to own local land, ships or aeroplanes registered locally. Ordinary non-resident or exempt companies are used for conducting offshore or international business. The main differences between these two types of company are that an exempt company is allowed to issue bearer shares, use foreign terms in its name, and has fewer filing formalities. Foreign companies may register a place of business in the Cayman Islands and conduct offshore business. In the case of Banks, a foreign Bank may set up a branch operation by this method. All banks registered in the Cayman Islands must have a physical presence there. PKF Worldwide Tax Guide 2015/16 4
Guarantees against the future taxation of exempted companies, exempted limited partnerships and exempted trusts are available. The Governor in council gives an undertaking that no future law imposing any tax on profits, capital assets, gain, or appreciations will apply to the entity or its operations for a period of 20 to 30 years for an exempted company, and up to 50 years for exempted partnerships and trusts. CAPITAL GAINS TAX There is no capital gains tax in the Cayman Islands. OTHER TAXES The principal indirect taxes from which the government derives its income are stamp duties, customs duties, business licences and fees. STAMP DUTY The Stamp Duty Law provides for the payment of tax on various documents including: Real estate in all areas within the Cayman Islands Conveyance or transfer of immovable property Mortgage of property Bills of exchange: Cheques Others Lease of land: Term over 30 years With premium and term of less than 30 years Term is less than 30 years: CUSTOMS DUTY - but does not exceed five years - exceeds five years but not ten years 7.5% of the consideration or market value, whichever is higher 4% of the consideration if the transferee is a Caymanian 6% of the consideration in any other case 1% to 1.5% of sum secured KYD 0.25 each KYD 0.25 not exceeding KYD 100 KYD 0.25 each for every extra KYD 100 or part thereof up to a maximum of KYD 250 Same duty as on a conveyance on sale upon the full value of the property of interest therein Same duty as on a conveyance on sale upon the premium or other consideration 5% of the average annual rent 10% of the average annual rent - exceeds ten years 20% of the average annual rent Duties on imported goods average 22% with certain items duty free. These include certain agricultural products, certain textiles and luxury items such as perfumes, cameras, fine china and PKF Worldwide Tax Guide 2015/16 5
crystal. BUSINESS LICENSES AND FEES An annual fee is levied on all companies based on its share capital. In addition, licensed financial services companies pay annual licence fees, dependent on the type of business. Class A Bank KYD 200,000 to KYD 1,000,000 Class B Bank (unrestricted) KYD 60,000 to KYD 100,000 Class B Bank (restricted) KYD 37,000 to KYD 40,000 Trust Company KYD 6,000 to KYD 90,000 Class A Insurers Licence KYD 75,000 Class B Insurers Licence KYD 8,500 to KYD 10,500 Class C Insurers Licence KYD 5,000 Class D Insurance Licence KYD 84,000 Mutual Fund Licenced, Administered or Registered KYD 3,500 Mutual Fund Master Fund KYD 2,500 Mutual Fund Administrator KYD 5,000 to KYD 35,000 All local businesses require a licence and an annual payment is made dependent on the type and size of the business. These fees would not normally affect offshore companies and businesses. B PERSONAL TAX There are no taxes on income, capital gains or sales of real estate. Neither are there any death duties nor inheritance or gift taxes. C. TREATY AND NON-TREATY WITHHOLDING TAX RATES The Cayman Islands does not have a tax treaty with any country. Income received in the Cayman Islands from abroad may be subject to taxation in the country of origin. The Cayman Islands have signed a Tax Information Exchange Agreement (TIEA) with the following countries: Argentina, Aruba, Australia, Austria+, Belgium*, Brazil*, Canada, Chile+, China, Colombia+, Curacao*, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greece+, Greenland, Guernsey, Iceland, India, Indonesia+, Ireland, Italy*, Japan, Kenya+, Malta, Mexico, Netherlands, New Zealand, Norway, Philippines+, Poland, Portugal, Qatar*, Samoa+, Seychelles*, Singapore+, Saint Marteen*, Slovak Republic+, Slovenia+, South Africa, South Korea+, Spain+, Sweden, Turkey+, Ukraine+, United Kingdom, and United States of America. KEY * : Not yet in force. + : Indicates a country with which the Cayman Islands entered into TIEA negotiations under the 15 July 2010 letter of entrustment provided by the United Kingdom. NOTE: The Cayman Islands has signed an Inter-Governmental Agreement (IGA) with both the United Kingdom and the United States of America as it relates to FATCA. PKF Worldwide Tax Guide 2015/16 6