Friday, August 10, 2012

Cayman Island expats object to income tax

Once you start studying how expats around the world live, you can find yourself surprised by all sorts of things. For example, have you ever heard of the Posh Corps? This is a term Peace Corps volunteers use to describe volunteers who have it better than other volunteers. For example, a flush toilet or electricity might count as Posh Corps amenities and you'll sometimes read that some Peace Corps volunteers sneer at the Posh Corps because the latter has it easier.

I no longer get terribly surprised at what expats experience, but I was surprised by the headlines coming out of the Cayman Islands recently. Many people want to move to the Caymans because, among other things, there is no income tax for expats. So if you're not an American, you can live in the Caymans and pay absolutely no income tax whatsoever. If you are an American, you can avoid income taxes on the first $92,900 (as of this writing) of your income, though once you cross that threshold, you're immediately taxed on the difference at your full rate.

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This and the strict banking secrecy laws have served to turn this tiny island into the sixth largest financial center in the world. but the British government (who owns the Caymans) has directed this territory to find new sources of revenue because without taxes on expats, they're suffering a budget deficit.

Waterfront, George Town, Grand Cayman
Waterfront, George Town, Grand Cayman
Photo by Fevi Yu
So what did the Caymans do? They decided it was time to levy a tiny, 10% income tax on expats. The outcry over this has been so great that they have abandoned this plan. Cayman expats even have a Facebook group dedicated to protesting the expat tax.

I've been accused many times of not wanting to pay my fair share of taxes due to my objections to the insane US tax laws for expats, but that's mainly ignorance on the part of the accuser. I pay lots of taxes and I don't object to them. In this case, it appears that expats are objecting to paying any  income tax, even one as low as 10%. Part of the controversy appears to be that the income tax is only for expats and is therefore discriminatory. Others argue that fees and other taxes are high enough to make an income tax a burden. Regardless of the truth, it tends to make expats as a whole look greedy and doesn't help our situation.


  1. A tax haven moves to impose a tax on people who have moved there to not pay taxes. Those people object.

    This is as surprising as dark during nighttime.

    1. Michael, first, you're presupposing that they moved there to avoid taxes. Second, we're talking about income taxes. If other taxes, fees, or the general cost of living is high enough, it could very well be the case that these expats have a legitimate concern. I'm painfully aware of how many people assume that I'm some rich expat trying to screw Uncle Sam out of taxes, so I don't want to be too quick to judge.

  2. Yes, I am presupposing that. With their major industry being international finance based on no taxes this seems a pretty reasonable supposition.

  3. Yes we do have plenty of other taxes, paid by expats and natives alike. What was offensive about this proposal was that it would apply to Work Permit expats alone.

    Also, while it may seem amusing for us to complain about a measly 10% tax on remuneration, it's worth reporting that Cayman has no free health service at all, and no free education for Work Permit expats. The main tax we have is 22% on all imports. For further details check out my blog "Barlow's Cayman".

    Oh, and I had better report this too: I have lived here for 34 years, and have yet to become a billionaire - and time's running out!