Cayman Island Individual Tax Guide

Worldwide Personal Tax and Immigration Guide 2020–21

269

Cayman Islands ey.com/globaltaxguides

Grand Cayman EY Mail address: P.O. Box 510 Grand Cayman KY1-1106 Cayman Islands

GMT -5 Street address: 62 Forum Lane Camana Bay Grand Cayman Cayman Islands

Executive contact Christopher J. Larkin

+1 (345) 814-8919 Email: chris.larkin@ky.ey.com

Immigration contact Janiecia Connolly

+1 (345) 814-8951 Email: janiecia.connolly@ky.ey.com

A. Income tax The Cayman Islands government does not tax the income or capital gains of resident or nonresident individuals.

B. Social security No welfare or social security taxes are imposed. No deductions or contributions are required for any other government-sponsored programs. Medical insurance is mandatory for all private employees in the Cayman Islands. Employees must contribute a minimum of 5% of their earnings to a mandatory pension plan up to KYD87,000 except for foreign workers who have completed less than nine months of their employment contracts.

C. Business licenses Unless exempt, every person or company carrying on a trade or business in the Cayman Islands must have a business license for each location where the trade or business is conducted. The cost of the annual license depends on the type and location of the business and on the number and type of employees. The license fee is payable every year, and the application for renewal must be made at least 28 days before the anniversary of the grant of the license.

Companies carrying on a trade or business in the Cayman Islands that are not 60% owned and controlled by Caymanians also need a license under the Local Companies (Control) Law. This license normally has a 12-year term.

D. Double tax treaties The Cayman Islands have not entered into any double tax treaties.

E. Entry into the Cayman Islands Visitors, other than prohibited immigrants, wishing to enter the Cayman Islands are normally permitted to enter and remain initially for up to one month. Frequent short-term visitors and persons who have other close connections to the Cayman Islands may be granted permission for entries lasting up to six months.

270 C AY M A N I S L A N D S

Applications for extensions to these permitted visitations must be made within that period to the Chief Immigration Officer.

Before a visitor may enter the Cayman Islands, a valid passport or other document establishing the identity and nationality of the visitor is required. In addition, visas are required for nationals of all jurisdictions other than the following jurisdictions.

Andorra Antigua and Barbuda Argentina Australia Austria Bahamas Bahrain Barbados Belgium Belize Botswana Brazil Brunei Darussalam Bulgaria Canada Chile China Mainland (a) Costa Rica Croatia Cyprus Czech Republic Denmark (including associated territories) Dominica Ecuador Estonia Eswatini Fiji Finland France (including overseas collectivites and communities) Germany Greece Grenada Guyana Hong Kong (b) Hungary

Iceland Ireland Israel Italy Japan Kenya Kiribati Kuwait Latvia Lesotho Liechtenstein Lithuania Luxembourg Malawi Malaysia Maldives Malta Mauritius Mexico Monaco Mozambique Namibia Nauru Netherlands (including associated territories) New Zealand (including associated states and overseas territories) Norway (including associated territories) Oman Panama Papua New Guinea Peru

Poland Portugal Romania St. Christopher and Nevis St. Lucia St. Vincent and the Grenadines Samoa San Marino Seychelles Singapore Slovak Republic Slovenia Solomon Islands South Africa Spain Sweden Switzerland Taiwan (d) Tanzania Tonga Trinidad and Tobago Tuvalu United Kingdom (including Crown Dependencies and British overseas territories) (c) United States (including associated territories) Vanuatu Venezuela Zambia

(a) Only those Chinese nationals holding a Hong Kong passport do not need an entry visa to enter the Cayman Islands. (b) The individual must hold a Hong Kong passport. (c) The visa exemption does not apply to nationals of the following British Commonwealth countries.

Bangladesh India Sierra Leone Cameroon Jamaica Sri Lanka Gambia Nigeria Uganda Ghana Pakistan (d) The visa exemption applies only if the individual holds an ordinary passport that includes personal identification numbers issued by the Ministry of Foreign Affairs in Taiwan.

C AY M A N I S L A N D S 271

Each person arriving in the Cayman Islands is required to produce for inspection by an immigration officer a passport or other valid document establishing his or her identity and nationality or place of permanent residence. This should be valid beyond the date of their return ticket. Proof of citizenship or residence may be established by producing photo identification together with a certified copy of a birth certificate, or a naturalization certificate.

Persons from certain jurisdictions are also required to possess a valid visa for the Cayman Islands.

Nationals of China Mainland and Jamaica, who possess a valid visa from Canada, the United Kingdom or the United States, can visit the Cayman Islands if arriving directly from the country for which that visa was issued. Persons taking advantage of the waiver of the visa requirement above are permitted to enter and remain in the Cayman Islands for a period not exceeding 30 days.

A visitor must possess a passport or other appropriate documentation that is valid beyond the date of his or her return ticket.

However, this documentation does not necessarily have to be valid for over six months if this is longer than the length of stay.

A visitor must also possess a paid-up return ticket or tickets entitling the visitor and his or her dependents, if any, to travel to their next destination outside the Cayman Islands. A visitor may also be required to satisfy the immigration officer that he or she has sufficient funds to maintain himself or herself and his or her dependents during the period of their stay in the Cayman Islands.

The law also states that persons may be refused entry if they fail to satisfy officials that they will be admitted to another country after their stay. In such circumstances, to enter the Cayman Islands, these persons would need a passport or valid travel document.

Any resident of the United States who arrives in the Cayman Islands directly or is in transit and who produces a valid US Alien Registration Card may be permitted to enter and remain in the Cayman Islands for up to 30 days. This concession enables some individuals who otherwise would need to obtain Cayman Islands visas before their journeys to travel to the Cayman Islands without visas.

Foreign nationals, including tourists, who are granted permission to enter and reside in the Cayman Islands are not permitted to engage in any form of employment, or to carry on or offer to carry on any financial, professional, trade or business activity without valid work permits. An exception is made for individuals who have been granted permanent residence (see Section G).

If a prospective employee is not a national of an Englishspeaking country and they are already in the Cayman Islands, he or she is required to come to the Department of Immigration Headquarters to take an English test. If a prospective employee is not yet in the Cayman Islands, he or she is required to take an English test on arrival at the Department of Immigration Headquarters. If an individual is found not to possess sufficient knowledge of the English language, he or she will be refused entry or, if resident in the Cayman Islands, may have his or her permission to remain or work permit revoked.

272 C AY M A N I S L A N D S

F. Work permits General. The Cayman Islands’ immigration policy gives employ-

ment precedence to those who hold Caymanian status, but recognizes that the continuing expansion of the economy often entails the recruitment of skilled individuals from overseas.

An employer who is unable to find a Caymanian with the necessary qualifications to fill a vacancy may apply for a work permit to bring in a qualified non-Caymanian. Non-Caymanians wishing to work in the Cayman Islands must have job offers from local employers who must apply for work permits.

The applications are handled by the Chief Immigration Officer, the Work Permit Board, which is appointed by the government to control the entry, residence and employment of non-Caymanians (the Chief Immigration Officer is a non-voting member of the Work Permit Board), or the Business Staffing Plan Board (see below). Work permits are normally issued for a specific occupation with a specific employer. The relevant board may set conditions or limitations on granting a permit.

Before an application is made to the relevant board, the vacant position must be advertised every six months in the local press for a minimum of two issues for two consecutive weeks and must indicate a full and accurate job description, remuneration, benefits and identity of the employer. Certain categories of workers are exempt from the advertising requirement, including individuals married to Caymanians, domestic helpers, various unskilled laborers in construction, agriculture and other specified industries, and self-employed individuals.

The following actions are required by a foreign national seeking employment: • Obtain, complete and return to the employer the work permit application form, together with evidence of qualifications and experience.

• Enclose one full-faced, passport-size photograph.

• Obtain a police clearance certificate from the applicant’s home district or last place of residence, issued within six months before the date of application. For applicants from the United Kingdom and other jurisdictions where the police do not readily issue clearance certificates, an affidavit of no convictions, sworn before a notary public, may be submitted.

• Obtain a medical certificate of good health, completed on the board’s prescribed form.

• Provide notarized copies of any professional certifications or credentials to support the applicant’s qualification for the position.

• If the applicant’s dependents are also seeking to reside in the Cayman Islands as part of the work permit application, provide certified copies of the marriage certificate for the spouse and birth certificates for the dependent children. A police clearance certificate and completed medical exam are also required for the spouse and dependent children over the age of 18.

Companies licensed to carry on business in the Cayman Islands may also submit a detailed business plan outlining their staffing requirements for the next three to five years, including identifying the number of Caymanians employed, plans for training and

C AY M A N I S L A N D S 273

promotion programs and increasing the number of Caymanians on staff, and the demands for foreign expertise and personnel over that period. These business plans are reviewed by the Business Staffing Plan Board and, if accepted, provide a fast track to identify the permit sought as within the categories of the plan.

The following individuals do not require work permits and are exempt from the requirement to pay a nonrefundable registration fee or work permit dependent fee: • Caymanians • Holders of permanent residence with the right to work • Holders of a Residency and Employment Rights Certificate • Holders of a Visitor’s Work Visa • Ministers of religion and teachers • Spouse of a Caymanian • Persons working for a nonprofit cultural, educational or charitable body • Surviving spouse of a Caymanian who has not married a nonCaymanian • Exempt Cubans • Cayman Islands Monetary Authority employees • Employees of the Cayman Islands Civil Service • UK government employees working in the Cayman Islands • Consular officers and staff • Accredited representatives or agents of a government of a British Commonwealth country • Members of the British armed forces • Members of crews of visiting vessels and aircraft • A person who is the beneficial owner of up to two units of property and is lawfully present in the Cayman Islands to facilitate rental or lease arrangements with respect to such units and whose spouse does not own, operate or have an interest in those units • Other persons declared by the Governor-in-Cabinet to be exempt from work permit requirements • Other persons declared to be exempt under the provisions of the Immigration Law Work permits are granted for employment with a specific employer and may not be transferred. With respect to entities with multiple subsidiaries, it is possible to demonstrate that such multiple employers share the permit related to the application.

After an application is accepted, changes may be made under exceptional circumstances. Inappropriate variances from a permit that the Immigration Board considers abusive may result in the immediate termination of the work permit or non-renewal of the work permit on its expiration.

Temporary work permits allow foreign nationals to enter the Cayman Islands for specified temporary employment. A temporary work permit may be issued for all occupations for periods of up to six months at the discretion of the Chief Immigration Officer. A temporary work permit may not be extended or renewed unless it was issued for an initial period of less than six months. Applications for temporary or short-term permits are made to the Chief Immigration Officer.

274 C AY M A N I S L A N D S Fees. Employers must pay an annual fee for a work permit for

each non-Caymanian person working in the Cayman Islands. The fees vary from USD183 for domestic, manual and unskilled workers to USD39,512.20 for partners, managing directors and chief executive officers of organizations. Spouses of persons with Caymanian status must apply for residency with employment rights before they are allowed to work in the Cayman Islands (see Section G). An annual supplemental fee also applies for each dependent who requests to reside in the Cayman Islands as part of the employee’s application. The fee varies from USD305 for domestic, manual and unskilled workers to USD610 per dependent for all other workers. Application filing fees range from USD85.36 to USD1,219.51.

On the initial grant of a work permit, employers are also required to pay a nonrefundable fee of USD244 per person as a guarantee for the repatriation of expatriate employees and their dependents.

Term limits. The initial term for a work permit may be up to three

years, or up to five years with respect to permits for domestic helpers, doctors, teachers, nurses, ministers of religion or workers filling positions authorized by the employer’s business staffing plan. The maximum total time for which an annual work permit may be granted and renewed for an individual is nine years, unless the employee is designated as a key employee (see below). On expiration of the nine-year term limit, the person is required to leave the Cayman Islands for a minimum period of one year. After the end of this one-year period, the employer may apply for another annual work permit for the individual and the term-limit period begins again.

Employers may apply to have a person designated a key employee. Persons approved as key employees are granted an additional two years to their work permit. After the end of the additional period, the person may apply for residency with a right to work as detailed in Section G. The employer must demonstrate that the person has specific skills or experience that is vital to the employer’s business and is not available within the Cayman Islands.

G. Residence permits Residence permits with a right to work. An individual designated

as a key employee who has resided in the Cayman Islands on a work permit for a continuous period of eight years may apply for the right to reside and work permanently in the Cayman Islands.

The permit is known as a Residency with Employment Rights Certificate. Spouses of persons possessing Caymanian status are also required to hold a Residency with Employment Rights Certificate to work in the Cayman Islands.

Applicants, other than spouses of Caymanians, are considered on a points system that takes into consideration factors contained in the Guidance for Points System, which is issued by the Immigration Board.

The applicant is required to pass a written examination on the history and culture of the Cayman Islands. A nonrefundable

C AY M A N I S L A N D S 275

application fee of USD1,219.51 is payable. On approval, the applicant is required to pay a fee. The minimum amount of this fee is USD595.24 for spouses of Caymanians, and domestic, unskilled and manual workers, and the maximum amount of the fee is up to USD15,243.90, based on the applicant’s income. The permanent residence holder is responsible for paying the annual fee each year, but he or she can make an arrangement with the employer to do so.

Effective from 25 October 2013, the Immigration Board is no longer granting any new key employee status. However, any previous key employee grantees can still apply after they meet the term limit requirements.

Permission to engage in gainful occupation is normally restricted to a specified occupation, but not to a specified employer.

Residence permits for persons of independent means. Government

policy encourages people of good reputation and financial standing who make substantial investment in the Cayman Islands to become permanent residents of independent means. Anyone wishing to reside in the Cayman Islands without engaging in employment may apply to the Chief Immigration Officer. To qualify, applicants must normally be able to financially support themselves and any dependents with a continuous source of annual income in the amount of at least USD147,000, without having to engage in any form of employment in the Cayman Islands. In addition, they must be able to make an investment in a home or a local enterprise of at least USD1,200,000.

To apply for an initial residence permit, an applicant must submit the following: • Application form completed in full, together with a cover letter and an application fee of USD610. A separate application is not required for accompanying dependents.

• Police clearance certificate. This certificate, obtained from the applicant’s home district or last place of residence, should cover the last 10 years. A certificate must be submitted for each accompanying dependent older than 18 years of age.

• A medical certificate of health for each family member and evidence of health insurance.

• Three written references from persons, not related to the applicant, who have known the applicant for several years.

• Full-faced, passport-size photographs for the applicant and each dependent.

• Evidence of financial status and local investment. A statement of financial position and statement of income demonstrating the applicant’s ability to support himself or herself without engaging in employment in the Cayman Islands is required.

These statements must be accompanied by such independent evidence as bank statements and tax returns and be certified by an independent accountant. This information is treated in strict confidence.

A separate application is not necessary for an accompanying spouse or for children younger than 18 years of age.

The application for permanent residence is reviewed by the Chief Immigration Officer, who may refuse, defer or grant the applica-

276 C AY M A N I S L A N D S

tion either unconditionally or subject to conditions or restrictions.

At this stage, the Chief Immigration Officer takes into account whether the applicant has made an investment and is living in the Cayman Islands. Evidence of ownership of a home with a value of at least USD2,439,024.39 is helpful.

If the application is successful and if the fee of USD24,390.24 is paid, the person is granted a Residency Certificate for Persons of Independent Means. The certificate, which is valid for 25 years and is renewable thereafter at the discretion of the Chief Immigration Officer, entitles the person to reside in the Cayman Islands without the right to work.

Persons of independent means have the option of applying for three other types of residency, subject to meeting the relevant requirements. These types of residency are described below.

Residency Certificate (Substantial Business Presence). Persons who invest in or are employed in a senior management capacity within an approved category of business may apply for a Residency Certificate (Substantial Business Presence). This category is open to persons already resident in the Cayman Islands and persons wishing to become resident. Applicants who meet the eligibility criteria and are of good character and health are issued a Residency Certificate (Substantial Business Presence), which is valid for 25 years and is renewable thereafter. The certificate entitles them to reside in the Cayman Islands and to work in the business in which they have invested or are employed in a senior management capacity.

Certificate of Direct Investment. Persons who are 18 years of age or older and who satisfy the requirements of the law may apply to the Chief Immigration Officer for the right to reside in the Cayman Islands as a high net worth investor. If this application is successful, the applicant is granted a Certificate of Direct Investment. This certificate is valid for 25 years and is renewable thereafter at the discretion of the Chief Immigration Officer. This certificate also entitles the applicant to reside in the Cayman Islands with the right to work in the businesses in which he or she holds an investment.

Certificate of Permanent Residency for Persons of Independent Means. The Certificate of Permanent Residency for Persons of Independent Means affords the holder residency for life. The holder of a Certificate of Permanent Residency for Persons of Independent Means or his or her spouse may apply to the Caymanian Status and Permanent Residency Board for a variation of his or her certificate to allow the right to work for any employer in a particular occupation or occupations specified by the board.

H. Family and personal considerations Family members. Except in exceptional circumstances and at the

discretion of the Immigration Board, a work permit holder may not bring more than three dependents to the Cayman Islands.

Unskilled workers are rarely permitted to have any dependents accompany or join them in the Cayman Islands.

Driver’s permits. Foreign nationals may drive legally in the

Cayman Islands with their home-country driver’s licenses for up

C AY M A N I S L A N D S 277

to three months. After three months, they must obtain Cayman Islands driver’s licenses.

The Cayman Islands does not have driver’s license reciprocity with other jurisdictions. To obtain a driver’s license in the Cayman Islands, an applicant must take written and physical exams. Holders of foreign driver’s licenses from certain jurisdictions that have agreements with the Cayman Islands are exempt from the examination requirements.