Without Direct Taxes, How Does the Cayman Islands Generate its Revenue?
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.
Yet, 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.
The top way to safeguard your retirement is to open a precious metals IRA. Check out the below providers and request a free kit.
Company | Personal Findings | Review | Free Guide | |
 | #1 Goldco | Best Overall Rating (Where I Invested) | ||
 | #2 American Hartford Gold | Best Buyback Program | ||
 | #3 Augusta Precious Metals | Most Educational ($50,000 Minimum) | ||
 | #4 Noble Gold | Best Metals Selection |
What Will I Learn?
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.
About Arthur Karter
Hi, I’m Arthur, and nobody wants to wake up in their 50s like me that they are in serious debt with minimal assets. This wake-up call forced me to reevaluate everything. After going through the school of Hard Knocks, I’m ready to help you by sharing the best retirement choices and how they differ from all the same-old, same-old options that financial advisors sell. These alternatives will help you build and protect your wealth.
