Observations About The 'Linked Property Transactions' Provisions Of Cayman's Stamp Duty Law

Caution: This client update gives a brief overview of the linked-property-transactions provisions (the LPT provisions) of the Stamp Duty Law (Revised) (the Law) which were introduced by the Stamp Duty (Amendment) Law, 2018 (the 2018 Amendment Law). This update is, however, general in nature; it is not to be taken as giving legal advice. For advice about a specific transaction, please contact a member of our Local Legal Services team.

Introduction

In late 2018, the Law was amended 1 "in order to eliminate the growing practice of reducing stamp duty due to the Government by means of linked property transactions".2 In essence, the reason for introducing the LPT provisions was to ensure that stamp duty is calculated on the total value of the raw land and the dwelling constructed on that land in the case of "a linked property transaction ... where a development scheme links the purchase of the raw land with the subsequent construction of a dwelling".3

Stamp duty is a charge on "instruments",4 not transactions, and the Law sets out the classes of instruments that attract duty (each referred to as a head of duty).

The LPT provisions added a new head of duty, namely, "CONVEYANCE OR TRANSFER of any immovable property within a development scheme and forming part of a linked property transaction" (the LPT head of duty).

There was, and continues to be, another conveyance head of duty, namely, "CONVEYANCE OR TRANSFER of any immovable property" (hereafter referred to as the ordinary conveyance head of duty). The concessional rates of stamp duty for first-time Caymanian buyers appear in paragraphs (10) and (11) of this head of duty.5

Do the concessions for first-time Caymanian buyers apply to linked property transactions?

For the reasons that follow, the short answer is "Yes".

To recap, the concessions for Caymanian first-time buyers appear in the ordinary conveyance head of duty; they are not mentioned in LPT head of duty. This fact has led some to suppose that such concessions do not apply to linked property transactions (LPTs). But this was not the Legislative Assembly's intention, as is plainly evident from the second-reading speech of the Minister of Public Finance, Economic Development who moved that the Bill be read a second time.

While Cayman cases caution about the use of reports of proceedings in the Legislative Assembly (LA), including Hansard,6 as an aid to statutory interpretation, it is clear that such recourse is appropriate here.7...