Cayman Finance has not yet received any details on the proposed “payroll tax” beyond that which has been reported in the media. We are therefore unable to offer any technical or specific feedback on the proposal at this stage.
We do, however, have some serious concerns about what is being proposed and its potential negative impact on the financial services industry and the Cayman Islands as a whole.
While we welcome the proposed expenditure reductions as a positive step, we support the general opinion held by many within the wider business community that the Government should place the further reduction of recurrent expenditure as a priority in its current efforts to balance the budget. Such cost cutting measures should take precedence over any additional revenue measures.
It should also be noted that the Cayman Islands is already a relatively expensive place to do business, in particular in regards to work permit fees and trade and business licenses. The proposed tax will undoubtedly lead to a further increase in the burden faced by all businesses in the Cayman Islands, despite the suggested optional pension contributions for expatriates.
We encourage the Government to carefully consider the wider implications for the economy, and to engage in a comparative analysis of the cost of doing business across the various competing jurisdictions before taking any decisions on this proposed tax.
We further encourage policymakers to take a more balanced approach to resolving the current fiscal challenges which includes significant efforts in the area of expenditure reduction. As always, Cayman Finance stands willing and keen to assist Government in these efforts to create a sustainable budget.