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Economy and Banking Sector of the Cayman Islands

Cayman Islands
Location
Caribbean Sea
Population  (2015)
60 413  (+0.04%)
EU Status
not part of the EU (OCT)
Currency
KYD (Cayman Islands dollar)
Nominal GDP (2015)
2.8 bln KYD  (+0.03%)
Credit Ratings (as of Sep 2016)
-/Aa3
Consolidated Banking Assets (2016)
1 035.66 bln USD  (-12.21%)
Deposit Guarantee
0 KYD
Number of Banks
158

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 150 banks registered on the Cayman Islands, including over 40 banks of the top 50 banks of the world.

List of Banks in Cayman Islands
Banking Sector of the Cayman Islands

National Currency

Cayman Islands Dollar (KYD)

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.

Pegged Rate

1 KYD = 1.25 USD

GDP

Nominal GDP (2015)Real GDP Growth (2014)
2.8 bln KYD  (+0.03%)2.4 %  (2013: 1.5 %)

According to Economics and Statistics Office, nominal GDP of Cayman Islands in 2015 was 2.8 bln KYD.

Cayman Islands underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.1% over the past 3 years (2011 - 2014). In 2014 real GDP growth was 2.4% which was above the Euro Area average (0.9%) and above the European Union average (1.3%).

Real GDP Growth in Cayman Islands. Chart 1. Real GDP Growth in Cayman Islands. Source: Economics and Statistics Office.

Inflation Rate

CPI, Year Average (2016)
-0.6 %  (2015: -2.4 %)

According to Economics and Statistics Office, inflation rate in Cayman Islands in 2016 expressed as annual percentages of average consumer prices was -0.6% which was below the Euro Area average (0.2%) and below the European Union average (0.3%).

Inflation Rate in Cayman Islands. Chart 2. Inflation Rate in Cayman Islands. Source: Economics and Statistics Office.

Unemployment Rate

Unemployment Rate (2015)
4.2 %  (2014: 4.7 %)

Credit Ratings (as of Sep 2016)

Fitch Moody's
- Aa3 (high grade), outlook stable

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 in the Cayman Islands: 0.0 - 0.0%

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

Dividends Interest
Natural person, resident 0.0 %0.0 %
Natural person, non-resident 0.0 %0.0 %
Table 1. Withholding tax rates in Cayman Islands.

Double Taxation Agreements

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

DTAs of the Cayman Islands: 1 Signed Agreements

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

Information Exchange

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

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

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

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

Exchange on Request: 35 Signed Agreements

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 Exchange: Starts in September 2017

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

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).

FATCA Status in the Cayman Islands
IGA in effect since 29 November 2013, Model 1

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

Deposit Guarantee Scheme

Maximum Protected Amount
0 KYD

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

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

There is no deposit guarantee scheme in Cayman Islands.

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) Foreign Currency
Aa2 (high grade) Aa3 (high grade)

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

Banking Supervision

Cayman Islands Monetary Authority

Banking Sector Structure

Number of Banks
158
Consolidated Assets (2016)
1 035.66 bln USD  (-12.21%)

Currently there are 158 credit institutions operating in Cayman Islands.

In 2016 consolidated banking assets in the Cayman Islands were 1 035.66 bln USD. The consolidated banking assets' evolution is shown at Chart 3 below.

Consolidated banking assets in Cayman Islands. Chart 3. Consolidated banking assets 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)51
Category B (Banking)96

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