CAYMAN ISLANDS Law and Practice Contributed by: Adam Johnson, Appleby
8. Tax 8.1 VAT and Sales Tax
corporation sole or charitable corporation) that holds any legal or beneficial interest (excluding interests cre - ated pursuant to bona fide security instruments) in landed property in the Cayman Islands (or interest in another land-holding corporation). Landed property includes freehold interests in Cayman Islands real property and any leasehold interest where the original term exceeded 30 years. In addition, ad valorem stamp duty is payable (subject to certain exceptions that are again at the discretion of the Minister of Finance) on debentures and legal or equitable mortgages or charges of immovable or movable property within the Cayman Islands. The following applies for a debenture or a legal or equitable mortgage or a charge of immovable prop - erty within the Cayman Islands: • where the sum secured does not exceed KYD300,000, duty is 1% of the sum secured; and • where the sum secured is more than KYD300,000 (whether initially or after a further advance), duty is 1.5% of the sum secured. In the case of a legal or equitable mortgage or a charge of movable property within the Cayman Islands, duty is 1.5% of the sum secured (subject to a maximum charge of KYD500 where the security instrument is granted by a Cayman Islands exempted company, a Cayman Islands ordinary non-resident company, a Cayman Islands exempted trust or a body corpo - rate incorporated outside of the Cayman Islands, or where the security is over shares in a Cayman Islands exempted company or a Cayman Islands ordinary non-resident company). Finally, policies of insurance for property within the Cayman Islands attract ad valorem stamp duty of 2% of the cost of the new or renewed property insurance premiums, which is usually added to insurance pre - miums. Most other related instruments and documents are subject to a fixed rate of stamp duty in comparatively nominal amounts. Registrable instruments are also subject to relatively immaterial registration fees.
Ad valorem stamp duty is payable on the following (subject to certain exceptions that are at the discretion of the Minister of Finance) on the following: • a conveyance or transfer of any immovable prop - erty (freehold or leasehold), typically at a rate of 7.5% of the purchase price or of the market value, whichever is higher (if less than KYD2 million) or 10% of the purchase price or of the market value, whichever is higher (if KYD2 million or above), although concessions or reduced rates may be available in specific circumstances (such as first- time Caymanian purchasers and purchasers of units in lower value new build homes); and • a grant of a lease of any immovable property: (a) if the term exceeds 30 years, 7.5% of the full market value of the leasehold interest in the real property; or (b) if the term is 30 years or less: (i) where any premium or other valuable con - sideration other than or in addition to rent is provided, 7.5% of the amount of the premium; and (ii) where the consideration or any part of the
consideration is rent: (i) 5% of the ag - gregate rent if the term is less than one year; (ii) 5% of the average annual rent or of market rent, whichever is higher, if the term is one year or more but does not exceed five years; (iii) 10% of the average annual rent or of market rent, whichever is higher, if the term exceeds five years but does not exceed ten years; or (iv) 20% of the average annual rent or of market rent, whichever is higher, if the term exceeds ten years.
Subject to limited exceptions, ad valorem share trans - fer tax is payable on the transfer or issue of equity capital in a land-holding corporation, at the rate of 7.5% (if less than KYD2 million) or 10% (if KYD2 mil - lion or more) of the proportionate value of the entire land holding. A land-holding corporation includes a partnership, foreign corporation, chartered corpora - tion, mutual fund or incorporated company (but not a
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