The Cayman Islands are likely to remain a legendary tax haven for the ultra-wealthy from around the world.
But some of the foreigners who live and work to make this tax haven tick could soon be paying more to call the Caribbean islands home.
Cayman Premier McKeeva Bush has proposed a 10 percent payroll tax on foreign workers who make more than $20,000 in local currency (that’s around $24,000 U.S.) a year.
But of course this isn’t a tax, or at least it is not according to Bush (no relation to the U.S. politicos of the same surname). Rather, the official name is “Community Enhancement Fee.”
To offset the payroll tax fee, foreign workers would no longer have to pay into the country’s pension system.
Cayman Islands civil servants would also be expected to start to pay a portion of their previously free health care coverage.
And the premier says he is working on an additional fee to enhance the regulatory environment of the financial industry in the Caymans. That’s a heads-up for any tax dodgers looking to stash cash there.
Do not forget that the Cayman Islands are a British Territory, meaning the country’s budget must be approved by the British Foreign and Commonwealth Offices.
And the Brits have not been happy with the Cayman Islands’ finances for years.
The three islands located just south of Cuba and, according to country’s tourist literature, just an hour’s flight from Miami, are the world’s fifth largest financial center, with more than 9,000 mutual funds, 260 banks and 80,000 companies operating through the Caymans.
But despite this financial pull, prosperity has not rubbed off on the majority of the islands population.
In 2009, Cayman money troubles prompted British financial officials to tell island leaders to cut spending and consider some form of direct taxation.
Bush was able to stave off that tax push, but it looks like taxes have finally made it to the sandy Cayman shores.
Don’t expect residents to accept the tax changes without a fight, because just like the citizens of the United States, they do not want a tax increase either.
The island nation currently is operating under an interim budget that runs through Aug. 31. In the effort to finalize Cayman accounts by then, expect to hear plenty of complaints and alternatives throughout the whole process.
The Cayman Finance Association says the government hasn’t done enough to rein in government spending.
Cayman legislator Ezzard Miller is circulating his own tax alternatives and the Facebook page of Caymanians & Expats United Against Taxation has almost 10,000 members.
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