Taxes

The Cayman Islands do not levy corporation tax, tax on dividends from foreign or local Investments, withholding tax on dividends to foreign/local shareholder (company or individual), interest income tax, withholding tax on interest, royalty Income tax, or capital gains tax.

There is no capital duty in the Cayman Islands.

The Cayman Islands do not levy VAT.

Stamp duty is imposed at various rates on the transfer of land/property in the Cayman Islands and execution of certain documents at 7.5% or 9%.

The range of purposes for which a Cayman company can be used includes investment, sales processing, trading, shipping operations, stock dealing, real estate holding, the ownership and licensing of patents, international financing, mutual funds, insurance, securitization, structured finance and aircraft finance.

Auditing

In the Cayman Islands only companies that are regulated by the Cayman Islands Monetary Authority (CIMA) are required to prepare, publish, and file financial statements. CIMA-regulated companies are those which are established under the Banks and Trust Companies Law, the Insurance Law, Mutual Funds Law, Securities Investment Business Law, and the Companies Management Law. These laws refer to generally accepted accounting principles without specifying accounting standards to be applied. In practice, however, the standards applied depends on the client due to the international nature of business in the Cayman Islands and the majority of financial statements are prepared under U.S. GAAP or IFRS.

Other Cayman Island entities which have been established under the Companies Law (2016 Revision) are required to keep proper books of accounts but do not need to publish or file financial statements as they are not subject to oversight by CIMA or any other government body. Small- and medium-sized entities (SMEs) that may be required to prepare or choose to prepare general purpose financial statements may use IFRS for SMEs or another recognized GAAP framework.

Audit reports issued from or within the Cayman Islands must be by a licensed member of the Cayman Islands Institute of Professional Accountants. The governing Accountants Law and Accountants (Quality Assurance) Regulations prescribe that the audit must be conducted in accordance with ISA, US GAAS or a standard assessed as equivalent with those by the Institute or the IAASB and in practice, the overwhelming majority of audits are conducted using US GAAS or ISA.

Cayman Island entities which have been established under the Companies Law are not subject to annual audit although the Law states financial statements may be audited from time to time as determined by the company.

Auditors in the Cayman Islands are largely regulated by the Cayman Islands Institute of Professional Accountants (CIIPA) in accordance with the Accountants Law of 2016. However, auditors of market traded companies are also subject to the supervision of the Auditors Oversight Authority (AOA). Auditors of all companies are required to be a Practitioner Member of CIIPA and have a practicing license. In order to be licensed to practice publicly in the Cayman Islands, individuals must be a member of good standing in one of the CIIPA-recognized Overseas Professional Accounting Institutes (OPAI) and be registered as a Regular Member of CIIPA, be a resident of the Cayman Islands, have at least seven years’ post qualification practical experience with five of those years as an assurance professional in an approved training firm a reasonable proportion of which in the most recent 2 years and in a supervisory or managerial role on assurance engagement teams. Public practitioners may also be subject to assessments as prescribed on competence, integrity, capability, Accessibility and Commitment.

Additionally, the AOA was established by the Auditors Oversight Law of 2011 as amended and is responsible for conducting QA reviews of audits of market traded, designated, and Cayman Islands Monetary Authority-specified companies and conducting investigations and issuing sanctions as it deems necessary. AOA is not authorized to set standards, regulate the accountancy profession, supervise financial reporting other than through its inspection activities, or to supervise securities regulation.

Sources

• Cayman Islands Government, Department of Commerce & Investment

• International Federation of Accountants

• World Tax website