Chambers And Partners: Private Wealth Guide 2017

  1. TAX

    1.1 Tax Regimes

    The Cayman Islands is made up of three islands: Grand Cayman, Cayman Brac and Little Cayman. They are located in the Western Caribbean Sea, approximately 500 miles south of Miami, Florida. The capital city, George Town, is located on the south western shore of Grand Cayman.

    The Cayman Islands is a British Overseas Territory, run as a parliamentary democracy with judicial, executive and legislative branches. The Cayman Islands has its own constitution and bill of rights. The local parliament, called the Legislative Assembly, has 18 elected members from whom a Premier, Deputy Premier and Speaker are appointed.

    A Governor, appointed by the Government of the United Kingdom, presides over meetings of the cabinet and has special responsibility for defence, external affairs, internal security, the police and the civil service. The Deputy Governor, who, along with the Attorney General is a non-voting ex officio member of the Legislative Assembly, is appointed by the Governor pursuant to advice from the Crown. The Governor also appoints members of the judiciary.

    The Cayman Islands has a sophisticated judicial system presided over by a Chief Justice and has a number of full- and part-time judges and justices of the peace, some of whom serve as lay magistrates. There are three courts: the Summary Court, Grand Court and Court of Appeal. The Grand Court, which has a dedicated Financial Services Division, has jurisdiction over all civil claims in the Islands. From there, appeals lie to the Court of Appeal which sits in the Islands three times a year. Final rights of appeal, in certain circumstances, lie to the Judicial Committee of the Privy Council in London.

    There are no income, capital gains, corporate, wealth, withholding, estate or inheritance taxes levied in the Cayman Islands. There are import duties payable on most items brought into the country. There is stamp duty payable on the purchase of land in the Islands and levied on certain documents executed within, brought into or produced before the court in the Islands. The cost of stamp duty on deeds and documents ranges from KYD15 to KYD100.

    The stamp duty calculated on the purchase of property is currently 7.5% of the purchase price or the market value of the property, whichever is higher, and a property assessment may be carried out by the Lands and Survey Department to establish which is the greater. There are time limits for the payment of stamp duty on property purchases, with fines and penalties for late payment. There are stamp duty exemptions available which currently do not apply to overseas first-time buyers.

    1.2 Recent Developments or Forthcoming Regulatory Changes

    The Cayman Islands is an 'early adopter' of the Common Reporting Standard. At the time of writing it has signed 36 bilateral tax information exchange agreements and agreed a Model 1 Inter-governmental Agreement with the USA. It has entered into bilateral tax treaties with 27 European Union Member States under which it reports savings income pursuant to the European Union Savings Directive.

    The Cayman Islands has a dedicated Tax Information Authority established in 2005 to assist in the discharge of the country's tax information exchange obligations.

  2. SUCCESSION

    2.1 The Role of Notable Cultural Factors in Succession Planning

    Cayman Islands succession law is based upon the principle of testamentary freedom, meaning that, subject to a person having the necessary capacity to do so, a testator or testatrix can leave his or her estate in his or her will to anyone that he or she wishes.

    The relevant statutes in connection with succession matters are the Wills Law (2004 Revision), the Succession Law (2006 Revision) and the Probate and Administration Rules (2008 Revision).

    Broadly, these laws set out the practice and procedure for obtaining grants of probate, letters of administration and resealing of foreign grants, as well as the rules relating to the disposition of an intestate's estate. If a person dies leaving a will, the executors will apply for a grant of probate which will authorise them to gain access to the estate of the deceased and distribute it in accordance with the terms of the will. If a person dies without a will, various relatives in order of priority are entitled to take out the grant of letters of administration. There are other grants of representation available to deal with less common situations, for example, ad colligenda bona grants, if there is an urgent need for a grant to be issued or to preserve assets in the estate until such time as the person entitled to take out the grant is able to do so.

    2.2 Forced Heirship Laws

    When a person dies without a will, the intestacy rules provide that the surviving spouse will share the estate with the surviving children...

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