Taxation Overview in the Cayman Islands
The Cayman Islands does not impose income tax on individuals, whether they are residents, non-residents, or Caymanian citizens. Instead, the government relies on indirect taxes, such as duties on goods and services, user fees, and consumption-based charges to generate revenue. The official currency is the Cayman Islands Dollar (KYD), which is pegged to the US Dollar. With no individual income tax, there are no taxable income categories, exemptions, deductions, or tax rates for personal earnings, salaries, business income, or capital gains. Additionally, there are no requirements for tax returns, assessments, or payments related to income tax.

Other Tax Considerations and Social Contributions
In addition to the absence of income and capital gains taxes, the Cayman Islands also does not charge inheritance or gift taxes, nor does it impose taxes on net wealth or real estate. Social security contributions are not required, but a national health insurance system mandates that employers cover health insurance premiums for employees. Employers are also responsible for providing pension plans, with both employers and employees contributing 5% of earnings, up to a set maximum. Self-employed individuals contribute the full 10% of their earnings to pensions. These systems are supported by specific legislation to ensure health and pension coverage for residents and employees.

1. Introduction

In the Cayman Islands, the government does not charge income tax on individuals, regardless of where their income comes from. This includes both residents and non-residents, as well as Caymanian citizens or those with Caymanian status. Instead of income tax, the government collects revenue through indirect taxes. These include duties (taxes on goods and services), user and licensing fees, and other consumption-based charges. The official currency in the Cayman Islands is the Cayman Islands Dollar (KYD), which is tied to the US Dollar with a fixed exchange rate of 1 USD = 0.82 KYD.

2. Individual Income Tax

There is no individual income tax in the Cayman Islands, so the following details, which would normally describe tax on earnings, are not applicable.

2.1 Taxable Persons

This section would typically define who must pay income tax, but since there is no income tax, it does not apply here.

2.2 Taxable Income

This section would list the types of income that are subject to tax, but since no income tax is charged in the Cayman Islands, it is not applicable.

2.2.1 General

Since there is no income tax, no income is taxed in the Cayman Islands.

2.2.2 Exempt Income

There are no exemptions because there is no income tax.

2.3 Employment Income

In the Cayman Islands, employment income is not taxed, so these sections do not apply:

2.3.1 Salary

Salary is not subject to tax in the Cayman Islands.

2.3.2 Benefits in Kind

Non-monetary benefits provided to employees, such as company cars or housing, are not taxed.

2.3.3 Pension Income

Pension income is also not subject to tax in the Cayman Islands.

2.3.4 Directors’ Remuneration

Payments to company directors are not taxed.

2.4 Business and Professional Income

Businesses and professionals do not pay income tax on their earnings in the Cayman Islands.

2.5 Investment Income

Investment income, such as dividends, interest, or royalties, is not taxed in the Cayman Islands.

2.6 Capital Gains

There is no tax on capital gains in the Cayman Islands, so this section does not apply.

2.7 Personal Deductions, Allowances, and Credits

Since there is no income tax, there are no personal deductions, allowances, or credits available.

2.7.1 Deductions

No deductions are needed because there is no income tax.

2.7.2 Allowances

No allowances apply due to the lack of income tax.

2.7.3 Credits

No credits are available because there is no income tax.

2.8 Losses

Since there is no tax on income, there are no provisions for carrying forward or deducting losses.

2.9 Rates

There are no income tax rates because income tax does not exist in the Cayman Islands.

2.9.1 Income and Capital Gains

There are no tax rates for income or capital gains.

2.9.2 Withholding Taxes

There are no withholding taxes in the Cayman Islands.

2.10 Administration

Since there is no income tax system, the administration sections for filing returns and making payments do not apply.

2.10.1 Taxable Period

There is no taxable period for income taxes because they do not exist.

2.10.2 Tax Returns and Assessment

There are no tax returns or assessments, as there is no income tax.

2.10.3 Payment of Tax

There is no need to pay income tax.

2.10.4 Rulings

Since there is no income tax, there are no tax rulings issued by the government.

3. Other Taxes on Income

There are no other taxes on income in the Cayman Islands.

4. Social Security Contributions

While there is no national social security system, there is a national health insurance system that all individuals must join. This is outlined in Section 5.1 of the Health Insurance Act (2021 Revision). Employers are responsible for paying the full health insurance premiums for their employees, as well as for their unemployed spouses. However, employers can recover up to 50% of the premium costs for the employee, and 100% for the unemployed spouse. These rules are found in Section 7 of the Health Insurance Act (2021 Revision).

Employers must also provide a pension plan for their employees, which can either be a company-specific plan or a multi-employer pension plan approved by the government. Both employers and employees contribute 5% of the employee’s pensionable earnings, with a maximum annual pensionable income of KYD 87,000. Self-employed individuals must contribute the full 10% of their earnings, as required by Section 7.47 of the National Pensions Act (2024 Revision).

5. Taxes on Capital

There are no taxes on capital in the Cayman Islands.

5.1 Net Wealth Tax

There is no tax on net wealth (the value of all an individual’s assets minus liabilities) in the Cayman Islands.

5.2 Real Estate Tax

There are no taxes on real estate in the Cayman Islands.

6. Inheritance and Gift Taxes

The Cayman Islands does not charge inheritance or gift taxes.

6.1 Taxable Persons

Since there are no inheritance or gift taxes, there are no taxable persons for these types of taxes.

6.2 Taxable Base

There is no taxable base for inheritance or gift taxes.

6.3 Personal Allowances

There are no personal allowances for inheritance or gift taxes.

6.4 Rates

No rates apply for inheritance or gift taxes.

6.5 Double Taxation Relief

There is no relief for double taxation because the Cayman Islands does not impose inheritance or gift taxes.

7. International Aspects

7.1 Resident Individuals

There is no income or capital gains tax on individuals in the Cayman Islands, whether they are residents or not, so these sections do not apply.

7.1.1 Foreign Income and Capital Gains

As there is no income or capital gains tax in the Cayman Islands, foreign income and capital gains are not subject to tax.

7.1.2 Foreign Capital

Foreign capital is not taxed in the Cayman Islands.

7.1.3 Double Taxation Relief

There is no need for double taxation relief because there is no income tax.

7.2 Expatriate Individuals

Expatriate individuals are also not subject to income or capital gains tax in the Cayman Islands.

7.3 Non-resident Individuals

Non-residents (those who are neither Caymanian citizens nor holders of Caymanian status) are not taxed on income or wealth, as there are no such taxes in the Cayman Islands.

7.3.1 Taxes on Income and Capital Gains

Non-residents are not taxed on income or capital gains.

7.3.2 Taxes on Capital

There are no taxes on capital for non-residents.

7.3.3 Inheritance and Gift Taxes

Non-residents are not subject to inheritance or gift taxes.

7.3.4 Administration

Since no income, capital, or inheritance taxes are imposed, there are no administrative processes related to these taxes.