Economy and Banking Sector of the Cayman Islands

The Cayman Islands are a British overseas territory situated in the western Caribbean Sea.

Tourism and offshore financial services are the most important sectors of the Cayman Islands' economy. The Islands are one of the major international financial centers.

There are more than 200 banks registered on the Cayman Islands, including over 40 banks of the top 50 banks of the world.

Location Caribbean Sea
Population (2011)56 732
EU Status not part of the EU (OCT)
Dependent Territory Of United Kingdom (British Overseas Territory)
Economy
National Currency KYD (Cayman Islands dollar)
Credit Ratings (as of Sep 2016)
    Fitch-
    Moody'sAa3 high grade, outlook stable
    S&P-
Taxation
Withholding Tax 0.0 - 0.0%
Double Taxation Agreements 1 signed agreements
Information Exchange 
    Exchange on Request 35 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 29 November 2013, Model 1
Banking Sector
Deposit Guarantee Scheme 
    Maximum Protected Amount 0 KYD
Country Ceiling for Deposits 
    Local Currency (Cayman Islands dollar)Aa2 high grade
    Foreign CurrencyAa3 high grade
Banking Supervision Cayman Islands Monetary Authority
Banking Sector Structure 
    Number of Banks179
 List of Banks in Cayman Islands

EU Status

Cayman Islands is one of the OCTs (Overseas Countries and Territories) of the European Union. This means that although its nationals are in principle EU citizens, Cayman Islands is not part of the EU or directly subject to EU law.

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the Cayman Island's Economy

National Currency

The official currency is the Cayman Islands dollar (KYD), which is pegged to the US dollar at a fixed rate: 1 KYD = 1.25 USD.

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Taxation in Cayman Islands

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Cayman Islands are shown in Table 1.

Dividends Interest
Natural person, resident 0.00.0
Natural person, non-resident 0.00.0
Table 1. Withholding tax rates in Cayman Islands.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Cayman Islands signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 United Kingdom
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Cayman Islands signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Aruba
 Australia
 Canada
 China
 Czech Republic (Sep 2013)
 Denmark
 Faroe Islands
 Finland
 France
 Germany
 Greenland
 Guernsey
 Iceland
 India
 Ireland
 Japan
 Mexico
 Netherlands
 New Zealand
 Norway
 Portugal
 South Africa
 Sweden
 United States

There are also several agreements between Cayman Islands and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Belgium (Apr 2014)
 Brazil (Mar 2013)
 Curacao
 Italy
 Malta (Nov 2013)
 Poland (Nov 2013)
 Qatar
 Seychelles (Feb 2014)
 Sint Maarten (Dutch part)
 United States (Nov 2013)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Cayman Islands signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Cayman Islands has FATCA agreement with the U.S. in effect since 29 November 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Cayman Islands are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is non-reciprocal: the Cayman Island's financial accounts hold in U.S. financial institutions will not be reported to the Cayman Island's authorities.

Further Information:
FATCA and European countries

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the Cayman Island's Banking Sector

Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

There is no deposit guarantee scheme in Cayman Islands

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Cayman Islands dollar) deposit ceiling for Cayman Islands is set to Aa2 (high grade), foreign currency deposit ceiling is Aa3 (high grade).

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Banking Sector Structure

Currently there are 179 credit institutions operating in Cayman Islands.

All the credit institutions operating in Cayman Islands can be classified into several categories. Table 2 summarises the number of banks in each category.

CategoryNumber of Banks
Category A (Banking & Trust)7
Category A (Banking)4
Category B (Banking & Trust)59
Category B (Banking)109

Table 2. Number of banks by category in Cayman Islands.

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