November 27, 2021

Cayman Islands government responds to Cayman Islands lawyer re stamp duty law

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Stamp_DutyThe following is in response to Cayman Islands query to government over the collection of stamp duty for unregistered leases – please see iNews Cayman story published March 9 2016 “Cayman Islands lawyer clarifies stamp duty law” at: https://www.ieyenews.com/wordpress/cayman-islands-lawyer-clarifies-stamp-duty-law/

From: Hall, Jon

Sent: Monday, March 14, 2016 4:29 PM

To: Peter Polack

Subject: Stamp Duty Law – Residential Leases

Dear Mr. Polack,

I refer to your email to Alan Jones, Chief Officer of PLAHI, 3rd March regarding collection of Stamp Duty on leases. He of course responded to you same day with his initial view and I have subsequently researched these matters further. In regard to the questions you raise may I therefore respond to you as follows:

1&2. You will be aware that under the Stamp Duty (SD) Law, duty is payable on all leases, however, the Law is silent as to whether it is the landlord or the tenant who has the liability to pay. Referring specifically to leases, the Law makes no differentiation between commercial or residential tenants, companies or individuals, Caymanian or non-Caymanian citizens. Likewise, no information is required as to employer, post or profession and consequently there has never been need to record the different category of payee. Regarding the personal leasing details of Government staff (Caymanian or otherwise), these are private / confidential to the respective staff member(s); staff cannot be required to furnish this information to their HR managers and hence they will not be held on file.

Consequently we do not hold the information you request.

  1. Presently, the prevailing rates of Duty are 5% of the annual rent on

leases up to 5 years, 10 % on leases up to 10 years, 20% on leases up to 30

years, with leases over 30 years treated the same as a freehold; the vast

majority of all leases will fall in to the 5% duty rate.

Total amounts of Stamp Duty collected on all leases from 2009 – 15 are

detailed as follows (commercial & residential) in CI$:

2009   $1.524m

2010   $353k

2011   $403k

2012   $438k

2013   $423k

2014   $551k

2015   $1.344m

  1. From the Lands & Survey / PLAHI and Finance perspective, enforcement is a key issue regarding collection of Stamp Duty on leases. Almost all leases submitted for Registration / Duty are received from lawyers acting on behalf of client companies and who are under a fiduciary duty to comply with the law; most leases submitted are thus for commercial, not residential premises. Also, it is usually the landlord’s lawyer who will arrange payment (probably having invoiced the tenant), knowing liability will ultimately lie with the ‘owner’ if the tenant does not pay and cannot be traced.

Lands & Survey Department and the Valuation & Estates Office in particular is acutely aware of the Duty collection issue which you raise . From 2009 a ‘Stamp Duty Chase’ programme was established regarding commercial leases. This somewhat laboriously involved writing to all business listed in the Yellow Pages, starting from letter ‘A’, requesting they provide evidence for the basis of occupation of their premises. This was a proactive collection strategy aimed directly at business premises, it being transparent as to who occupied which addresses. Unfortunately the programme has been temporarily suspended due to resourcing issues.

At the time the ‘Stamp Duty Chase’ was introduced, proposals were exchanged between the Lands & Survey and Finance Departments regarding possible changes to Duty rates on residential leases. Suggestions were made to simplify the ad-valorem duty through introducing ‘rent-banding’, and also to make landlords (ie the registered property owners) responsible for payment; tenants are somewhat transient, whereas landlords are easier to identify and track down for payment. In all likelihood, Landlords would simply collect from the tenants up-front, and then pay to Lands & Survey; there could be a marginal impact on rent values resulting from this but the required Duty would more likely be paid.

Whilst there is a shared obligation on the lease-parties to present their lease(s) for stamping, under the Law as presently drafted, enforcement of payment of Stamp Duty on residential leases is challenging, to say the least. It is, however, worth mentioning that penalties for late-payment of Duty are at a penal rate, exactly the same as late payment on freeholds, as may be found through the following link:

http://www.caymanlandinfo.ky/StampDutyInterest/tabid/152/Default.aspx.

Finally, I should advise that a wide-ranging policy review of the present Stamp Duty Law is presently underway involving the Valuation & Estates Office, Ministry of Finance and the Legal Drafting Section. Their proposals will be presented for consideration by Members immediately all details have been finalized, including reference to Duty on leases.

Should you have any further queries do please let me know.

Regards,

Jon Hall |Chief Valuation Officer | Lands & Survey Department, Cayman

Islands Government,

133 Elgin Avenue, George Town, Grand Cayman Box 120, Grand Cayman KY1-9000,

Cayman Islands

From: Jones, Alan

Sent: Thursday, March 03, 2016 2:22 PM

To: Peter Polack

Subject: Re: [SPAM] RE: Compliance: Section 20(4) STAMP DUTY LAW (2013

Revision)

Hi Peter,

I will let mssrs, Vasquez/Hall respond to you in a substantive manner and then will be more than happy to fill in any gaps and or further queries you may have.

In no way or manner have I shown any ‘reluctance to fulfill my obligations’ and am therefore perplexed as to‎ why you would state or infer this.

Happy to talk further when you have rec’d the reply from LS.

Regards,

Alan

END

So now you all know! However, watch this space. There may be another gripping episode to come.

IMAGE: www.ologyrealestate.com.au

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