Further to our story published March 3 2016 “Cayman Islands lawyer inquiry regarding collection of stamp duty for unregistered leases” at: http://www.ieyenews.com/wordpress/cayman-islands-lawyer-inquiry-regarding-collection-of-stamp-duty-for-unregistered-leases/ Peter Polack has clarified the Cayman Islands Stamp Durty Law Section 20 (4) (2013 Revision).

Polack says:

“Stamp duty is payable (at different rates) on any lease. There is widespread misunderstanding of what a lease is. Stamp duty is often referred to as an “instruments tax” i.e a duty levied on a document. A lease of less than 2 years does not require registration but it does require stamping. (A distinction that many/most cannot grasp).

“In about 2005/2006 Land Registry had a probe regarding commercial leases. They send out letters to many businesses and asked if they occupied their premises under a lease, if so they requested a copy and evidence that duty had been paid. I have reason to believe that the data for that enquiry was sourced from the ESO (you will recall the ESO surveys are subject to confidentiality and not to be used elsewhere).

“Out of that enquiry arose a further misunderstanding promoted by Land Registry itself – that only commercial leases were stamp able (residential ones not). There is no such provision in the SD Law and I believe LR even put a notice to this effect in the “Cayman Compass”.

“One idiotic aspect of the enquiry is that they clearly had a core database which they could so easily have maintained (they had leases with expiry dates and business names & locations). It would have been so simple to keep that data current and thereby have a means of collecting duty as leases were renewed. They let it go after the initial round of letters.”

On 3 March I wrote to the Chief Officers Finance (Jefferson) and Lands (jones)

I made the following query:

1.       That all UK senior members of the RCIPS have fulfilled their stamp

duty obligations for the years 2009-2015 for rented accommodation and/or unregistered leases.

2.       That all foreign employees of CIG have fulfilled their stamp duty

obligations for the years 2009-2015 for rented accommodation and/or unregistered leases.

3.       Amounts collected by CIG for stamp duty under Section 20(4) for the

years 2009-2015 for rented accommodation and/or unregistered leases.

4.       Section 30(1)enforcement action taken by your portfolio for stamp

duty under Section 20(4) for the years 2009-2015 for rented accommodation and/or unregistered leases.

 

Jones sent several emails in which he referred the matter to junior officers stating inter alia

 

On a general note I have to comment that it is impossible for LS (or anyone else) to be able to confirm that SD has been paid on all leases taken out by a certain group of people ,since there is just no way of knowing all of the contractual leases that exist. Bear in mind that some agreements of of the verbal variety. That is not to say that there isn’t a legal requirement on the part of the lessee to pay SD and/or register the lease (when the term is over the prescribed term). However, in practice there is no way of knowing what leases (particularly of the residential type) exist at any one point in time.

I replied:

 The easiest way to ensure compliance is to email the relevant government employees or their HR officer to determine if they are in compliance with the Stamp Duty and paying their fair share into the revenue of the Cayman Islands.

If you are reluctant to fulfil your obligations as chief officer then this matter can be pursued in a very different manner.

I note your attempt at a response but please advise steps you have taken as chief officer since appointment to remedy the self-same problems identified in your reply including:

3.       Amounts collected by CIG for stamp duty under Section 20(4) for the
years 2009-2015 for rented accommodation and/or unregistered leases.

4.       Section 30(1)enforcement action taken by your portfolio for stamp
duty under Section 20(4) for the years 2009-2015 for rented accommodation and/or unregistered leases.

 The Minister of Finance then stated:

 These are very valid concerns and I am interested in any way in which the CIG will improve the efficiency and effectiveness in collecting stamp duty revenue on leases.

Alan – please ask the Lands & Survey Dept. to include me in their response. Many thanks.

 My response to this was to criticize them /CIG and complain to the Auditor General:

 The importance of this critical failure of CIG can be determined from the example of the RCIPS COP who has been resident here for almost 6 years. If he had been paying stamp duty on rental accommodation of $2,000 p.m. the stamp duty payable would be CI$ 7,200 or almost US$10,000.

 When multiplied by the number of expatriate officers in the RCIPS and expatriate employees of the CIG the stamp duty payable runs into the millions, to be exponentially increased for work permit holders.

Your chief officer has sought to misdirect this enquiry into an FOI request attached hereto. It is suggested that the Chief Officer for the Ministry of Finance familiarize himself with the provisions of Section 29 of the Public Service Management Law as he will be facing further inquiry from the Deputy Governor at my request after completion of his full response hopefully before the next election.

Transparency like charity begins at home and it would be helpful if the Attorney-General as the highest law enforcement officer in the Cayman Islands voluntarily and expeditiously declares his compliance with this Stamp Duty Law requirement.

This position would equally apply to the RCIPS COP as chairman of the ACC.

The Ministry of Finance failures in Care Pay and Nation Building Fund before your election dealt with  misuse of CIG funds. This is a matter of gross negligence or other conduct to be determined in the future by those charged with securing CIG revenue.

In the circumstances of the pitiful response thus far, this matter is referred to the Auditor-General.

 

My comment to for the press was:

It has been a complete failure of management by an austerity regime that has seen important public services reduced while persons, especially in positions of integrity, fail to comply with the law for which there can be no excuse .

Those in breach must face the court as have the over ten thousand Caymanians with criminal convictions for infractions of the law however minor.

Any attempt to minimize or amnesty the powerful out of this situation should be rejected unless it applies to all Caymanians who face a five year rehabilitation period for minor fine offences that see them unable to travel for want of a police clearance certificate.

Stamp Duty Controversy Referred to Auditor General

Finance Minister Marco Archer has acknowledged the failure to collect stamp duty from unregistered leases especially from person in positions of integrity such as the RCIPS.
In a written response to the CIG failure to collect millions of dollars in unpaid stamp duty while pursuing austerity policies the Minister stated that these were:
valid concerns and I am interested in any way in which the CIG will improve the efficiency and effectiveness in collecting stamp duty revenue on leases
Neither the Chief Officer for the Ministry of Finance or the Minister revealed what steps they would be taking to remedy this situation.
Local lawyer Peter Polack has referred the matter to the Auditor General stating that:
The importance of this critical failure of CIG can be determined from the example of the RCIPS COP who has been resident here for almost 6 years. If he had been paying stamp duty on rental accommodation of $2,000 p.m. the stamp duty payable would be CI$ 7,200 or almost US$10,000.

When multiplied by the number of expatriate officers in the RCIPS and expatriate employees of the CIG the stamp duty payable runs into the millions, to be exponentially increased for work permit holders.

Your chief officer has sought to misdirect this enquiry into an FOI request attached hereto. It is suggested that the Chief Officer for the Ministry of Finance familiarize himself with the provisions of Section 29 of the Public Service Management Law as he will be facing further inquiry from the Deputy Governor at my request after completion of his full response hopefully before the next election.

Transparency like charity begins at home and it would be helpful if the Attorney-General as the highest law enforcement officer in the Cayman Islands voluntarily and expeditiously declares his compliance with this Stamp Duty Law requirement.

This position would equally apply to the RCIPS COP as chairman of the ACC.

The Ministry of Finance failures in Care Pay and Nation Building Fund before your election dealt with misuse of CIG funds. This is a matter of gross negligence or other conduct to be determined in the future by those charged with securing CIG revenue.

In the circumstances of the pitiful response thus far, this matter is referred to the Auditor-General.

Polack when on to state:
It has been a complete failure of management by an austerity regime that has seen important public services reduced while persons, especially in positions of integrity, fail to comply with the law for which there can be no excuse .
Those in breach must face the court as have the over ten thousand Caymanians with criminal convictions for infractions of the law however minor.

Any attempt to minimize or amnesty the powerful out of this situation should be rejected unless it applies to all Caymanians who face a five year rehabilitation period for minor fine offences that see them unable to travel for want of a police clearance certificate.

To: ‘Archer, Marco’

Cc: ‘[email protected]‘; ‘[email protected]‘; ‘[email protected]‘; ‘[email protected]‘; ‘[email protected]‘

Subject: Compliance Complaint : Section 20(4) STAMP DUTY LAW (2013 Revision)

Minister

Thanks for your reply.

The importance of this critical failure of CIG can be determined from the example of the RCIPS COP who has been resident here for almost 6 years. If he had been paying stamp duty on rental accommodation of $2,000 p.m. the stamp duty payable would be CI$ 7,200 or almost US$10,000.

When multiplied by the number of expatriate officers in the RCIPS and expatriate employees of the CIG the stamp duty payable runs into the millions, to be exponentially increased for work permit holders.

Your chief officer has sought to misdirect this enquiry into an FOI request attached hereto. It is suggested that the Chief Officer for the Ministry of Finance familiarize himself with the provisions of Section 29 of the Public Service Management Law as he will be facing further inquiry from the Deputy Governor at my request after completion of his full response hopefully before the next election.

To give Chief Officer Jones his credit he made an attempt to acknowledge the queries directly while deploying the well-worn civil service strategy of passing the buck to junior officers.

Transparency like charity begins at home and it would be helpful if the Attorney-General as the highest law enforcement officer in the Cayman islands voluntarily and expeditiously declares his compliance with this Stamp Duty Law requirement.

This position would equally apply to the COP as chairman of the ACC.

The Ministry of Finance failures in Care Pay and Nation Building Fund before your election dealt with  misuse of CIG funds. This is a matter of gross negligence or other conduct to be determined in the future by those charged with securing CIG revenue.

It has been a complete failure of management by an austerity regime that has seen important public services reduced while persons, especially in positions of integrity, fail to comply with the law for which there is no excuse .

In the circumstances of the pitiful response thus far, this matter is referred to the Auditor-General.

Regards

Peter Polack

From: Archer, Marco [mailto:[email protected]]
Sent: Tuesday, March 08, 2016 11:07 AM
To: Peter Polack; Jones, Alan
Cc: Manderson, Franz
Subject: RE:  Compliance: Section 20(4) STAMP DUTY LAW (2013 Revision)

Thanks, Peter.

These are very valid concerns and I am interested in any way in which the CIG will improve the efficiency and effectiveness in collecting stamp duty revenue on leases.

Alan – please ask the Lands & Survey Dept. to include me in their response. Many thanks.

Best regards,

Hon. Marco Archer

Alan

Thanks for reply.

Kindly send me a non-confidential reply failing which I will use reply below.

The easiest way to ensure compliance is to email the relevant government employees or their HR officer to determine if they are in compliance with the Stamp Duty and paying their fair share into the revenue of the Cayman Islands.

If you are reluctant to fulfil your obligations as chief officer then this matter can be pursued in a very different manner.

I note your attempt at a response but please advise steps you have taken as chief officer since appointment to remedy the self-same problems identified in your reply including:

3. Amounts collected by CIG for stamp duty under Section 20(4) for the
years 2009-2015 for rented accommodation and/or unregistered leases.

4. Section 30(1)enforcement action taken by your portfolio for stamp
duty under Section 20(4) for the years 2009-2015 for rented accommodation and/or unregistered leases.

I have copied this to Minister Archer who may be interested in your reply also.

Regards
Peter

—–Original Message—–
From: Jones, Alan [mailto:[email protected]]

To: Peter Polack
Cc: Manderson, Franz; Vasquez, Rupert; Hall, Jon; Fawcitt, David
Subject: Re: Compliance: Section 20(4) STAMP DUTY LAW (2013 Revision)

‎IN CONFIDENCE- NOT FOR PUBLICATION**

Hi Peter,

I have forwarded your e-mail to the Director, Lands & Survey and the Chief Valuation Officer who will respond to you direct.

On a general note I have to comment that it is impossible for LS (or anyone
else) to be able to confirm that SD has been paid on all leases taken out by a certain group of people ,since there is just no way of knowing all of the contractual leases that exist. Bear in mind that some agreements of of the verbal variety.
That is not to say that there isn’t a legal requirement on the part of the lessee to pay SD and/or register the lease (when the term is over the prescribed term). However, in practice there is no way of knowing what leases (particularly of the residential type) exist at any one point in time.

Regards,
Alan

To: Jones, Alan
Cc: Manderson, Franz
Subject: Compliance: Section 20(4) STAMP DUTY LAW (2013 Revision)

Chief Officer

Kindly confirm the following information within seven days hereof:
1. That all UK senior members of the RCIPS have fulfilled their stamp
duty obligations for the years 2009-2015 for rented accommodation and/or unregistered leases.

2. That all foreign employees of CIG have fulfilled their stamp duty
obligations for the years 2009-2015 for rented accommodation and/or unregistered leases.

3. Amounts collected by CIG for stamp duty under Section 20(4) for the
years 2009-2015 for rented accommodation and/or unregistered leases.

4. Section 30(1)enforcement action taken by your portfolio for stamp
duty under Section 20(4) for the years 2009-2015 for rented accommodation and/or unregistered leases.

You are reminded of your obligations under the Public Service Management Law.

Regards
Peter Polack

EDITOR ** We were instructed by Peter Polack to publish this and he did advise Alan Jones he would be doing this.