ci-ocean-front-view

The Cayman Islands is often portrayed as a tax haven. And indeed Cayman does not have any corporation tax, income tax, inheritance tax and similar kinds of revenue.

ci-flag-circleYet, residents are acutely aware that they are subjected to taxes as government needs to raise revenue to pay for infrastructure, health, education and the day-to-day operations of the public sector.

Rather than rely on direct taxation, Cayman’s economic model is based on indirect taxes, fees and duties.

 

Coercive revenue

The bulk of government revenue for the next 18 months, for example, comes from $852 million in what’s called “coercive revenue,” meaning mandatory fees and duties, including import duty, work permit fees and company registration fees.

 

Imports

The biggest revenue generator for the country is categorized as “other import duty,” forecast to bring in more than $152 million. This is import duty for most goods brought into the Cayman Islands, except for alcohol, tobacco and gasoline, which are separate categories. Most consumer products are subject to a 22-percent import duty, but in some case higher or lower rates can apply.

 

Drinking, smoking, driving tax

Together, importing alcohol, tobacco and gasoline account for about $52.7 million in government revenue over the next six months. Alcohol has the biggest share of that, contributing more than $27 million, with gasoline adding more than $13.5 million and tobacco adding more than $11.5 million.

 

Immigration fees

Fees for work permits, collected by the Immigration Department, government forecast will add almost $100 million in revenue. Annual work permit fees for people with permanent residence are expected to add more than $20 million to government coffers. The budget forecasts almost $12 million from other immigration fees, including non-refundable repatriation fees (meant to repatriate someone if they are forced to leave or pass away while working on island) and fees for applying for Caymanian status and permanent residency.

 

Company fees

Fees for company registration add more than $125 million to government revenue. The bulk of that income, $110 million, comes from exempt companies registered in Cayman. Bank and trust licenses add another $31 million to the budget. Mutual fund administrators are expected to pay more than $47.5 million to government and partnership fees are forecast to bring in more than $52 million.

 

Property

Government expects to make $55 million from stamp duty on land transfers in the new budget. Public revenue includes another $31 million for property-related fees, including land registry fees and building permits.

 

Tourism

Fees related to tourism, primarily charges for cruise ship departures and tourist accommodations, add more than $46 million to government’s budget.

 

Other revenue

Government expects to bring in more than $381.6 million from what’s considered “non-coercive” sources, including facility rentals, government sales and a separate set of fees.

 

Fees

Non-coercive fees, not be confused with the numerous fees considered coercive, are expected to contribute $158 million to government coffers.

These fees include trade certificates, marriage licenses, a number of immigration fees not included in coercive immigration permit fees, passport fees and dozens of other small fees from core government, statutory authorities and government companies.

Government expects to bring in more than $2.5 million in garbage fees, more than $2 million for vehicle inspections, $11 million for aircraft inspection and licensing, and more than $18 million in cargo handling fees.

 

Sales

Sales account for more than $157 million in government income for the next 18 months, including authorities and government-owned companies.

Sales include $39 million from the Water Authority, $64 million for Cayman Airways passenger tickets, and $15 million for vehicle licensing fees. Police clearances are expected to generate more than $1.3 million in revenue.

The budget forecasts income of more than $2.4 million from postage stamps, not including the $30,000 expected for “philatelic sales” to stamp collectors.

 

Rentals

Rentals of post office boxes, government facilities like craft market stalls and town halls, contribute almost $5.5 million to the government budget in the coming fiscal cycle.

P.O. Box rental fees are expected to generate more than $1.5 million for the new budget. The budget forecasts government housing rentals will bring in $38,000.

SHARE
Previous articleIn defense of the British Empire
Next articleOut of line – Hanjin Shipping’s filing for receivership raises more concerns for the maritime industry
Charles Duncan
Data-Journalist, Pinnacle Media Ltd., Cayman Islands

Pinnacle Media Ltd

Cayman Financial Review is the only magazine which promotes the Cayman Islands financial services industry at a local and international level. Produced by Cayman’s leading printing and publishing company Pinnacle Media Ltd, the Cayman Financial Review is published quarterly and is distributed in print and online to organisations and associations worldwide as well as at key financial conferences.

Over 30,000 online and targeted printed copies are distributed to clients, their nominated local and international contacts, relevant conference participation lists and a current researched international contact list continuously updated and prepared by Pinnacle Media Ltd. In addition the product has a fully integrated website, a link of which will be sent to ‘Top 500’ legal, accountant, government, insurance, financial service and hedge fund contact list in United States, United Kingdom, Europe, South East Asia, Dubai and the South Americas.
 

The Compass Centre
Shedden Road
PO Box 1365 GT
Grand Cayman
Cayman Islands
British West Indies
KY1-1108

T: +1 (345) 949-5111
F: +1 (345) 949-7675
W: www.caycompass.com