Thursday 9th August 2012

Calculating the cost of expat tax

Expatriates living in the Cayman Islands received welcome news this week when they were informed that plans to impose an income tax on foreign workers who are based in the British Caribbean territory would not be going ahead.

Following outrage from expatriates and locals alike, the government back-tracked on their plans to introduce the controversial tax, issuing a brief press statement that confirmed that the proposed levy was “off the table and will not be implemented.” No mention of any alternative revenue-generating plans were mentioned but having met with many of the islands’ high-profile business leaders, Cayman Islands Premier McKeeva Bush said on Monday that alternate revenues had been identified: “The tax would be taken off the table if robust, credible and sustainable revenue that did not hurt the poorest members of our islands was found. We are satisfied that many of the commitments from the private sector will meet these criteria,” he said.

The news has been welcomed by the island’s expatriates, many of whom would have been affected by the planned 10 percent “community enhancement fee,” which would have been levied on foreign workers earning more than US$43,200, amended from US$24,000 when it was initially announced. Many expats had cried foul, arguing that the taxation would be discriminatory, while local residents had raised concerns that such measures could seriously affect the economy. Representatives from the Cayman Finance Association had also argued that the government themselves had not done enough to rein in government spending to justify a measure such as a payroll tax.

According to the Associated Press, the measures would have affected about 5,870 expatriates.

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