Cayman Government Hikes Fees For Offshore And Local Firms

by Amanda Banks, Tax-News.com, London

02 May 2006

Cayman Financial Secretary Kenneth Jefferson announced in last week's budget statement that a number of fees affecting entities in both the offshore and domestic sectors will be increased from the start of the next financial year to raise additional revenue for the government.

As a result of the budget, Tax Undertaking Certificates, which are often sought by Exempted Companies, Exempted Limited Partnerships and Exempted Trusts will be increased from $150 to $500 in a move that is expected to raise $2.1 million in additional revenue during the 2006/7 financial year.

These certificates are used by offshore entities to insulate themselves against the possibility of future taxation being introduced in the Cayman Islands and are valid for a maximum of 30 or 50 years.

The new revenue measures also incorporate increases to: Captive Insurance Licences; external Insurer Licences; Restricted and Unrestricted Trust licence application fees and the Annual Licence Fee for Restricted Trusts. These fee increases are expected to generate additional revenue of $0.4 million during the 2006/7 financial year.

There will also be an increase in the fees charged by the General Registry. The most significant change pertains to the issuance of Certificates in respect of companies listed on the Companies Registry. The fee for obtaining a Certificate of Good Standing will increase from $41 to $82. This is expected to produce extra revenue of $2.6 million in 2006/7.

Fees for the provision of copies of documents kept on file with the Companies Registry will also increase from $41 to $82 and this is expected to generate $0.7 million of additional revenue. Annual fees for Exempted Trusts will be increased from $100 to $500 and this is expected to yield a further $0.3 million during the 2006/7 financial year.

Various Certification and Document fees in respect of partnerships will be increased from $50 to $82. This proposed change is expected to produce $0.3 million of additional revenue in 2006/7.

Changes to several other fees relating to services provided by the General Registry for Patent and Trade Mark Registrations, matters arising from the Public Recorder Law and the Births, Deaths and Marriages Registry are expected to provide an extra $0.2 million in revenue.

Practicing and operational licence fees will also go up. At present, law and accounting firms pay $1,500 per lawyer or accountant. It is proposed that this fee be increased to $2,000. This measure is expected to yield additional revenue of $0.2 million.

In addition, a new schedule of fees is also proposed for Operational Licences for Law and Accounting firms which is designed to take into account the number of lawyers and accountants employed in their respective firms. It is proposed that the maximum licence fee be increased to $400,000 for firms that have fifty one or more accountants or lawyers. The maximum licence fee, at present, is $300,000. This measure is expected to produce additional revenue of $0.3 million during the financial year 2006/7.

Fees for Local Companies Control Licences, which have not been changed since 1972, will be increased by the government from $200 to $2,500 to raise an additional $0.4 million of revenue.

The revenue measures are scheduled to take effect on 1st July 2006 – the start of the upcoming financial year.

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