Cayman Islands: local rules

The Cayman Islands has no corporate income tax and no transfer pricing law. There is no local rule that tells a company to price deals with related parties at arm's length, so arm's length pricing matters here only through the rules of the other countries a group operates in. The Cayman rules that matter to multinational groups are about reporting, not tax. The Tax Information Authority Act (2021 Revision), s.25, lets the Cabinet make regulations, and the Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations, 2017 (SL 99 of 2017) set up country-by-country (CbC) reporting. The International Tax Co-operation (Economic Substance) Act (2026 Revision) (the ES Act) makes Cayman entities that carry on certain mobile activities show real activity in the Islands. The DITC runs both through the DITC Portal. The DITC administers these laws as the Tax Information Authority, the Cayman competent authority.

Cayman has no transfer pricing documentation rule. The DITC has said in an industry advisory (20 December 2017) that Cayman does not require a master file or a local file, and does not require Constituent Entities that are not the Reporting Entity to file a CbC report. The only documents the law asks for are the CbC report (Reporting Entities only), the annual Economic Substance Notification (ESN) and, for some entities, the Economic Substance return. The CbC regulations (reg 10(3)) and the ES Act (s.7(8)) both require records to be kept for six years.

Cayman has no transfer pricing methods. No local law or guidance names the OECD methods or sets an arm's length range, because there is no tax base to adjust. A Cayman entity that deals with related parties in other countries follows those countries' methods and documentation rules.

CbC: failing to notify, file on time or comply with a request is an offence under reg 12 of the CbC regulations. On summary conviction the fine is 10,000 dollars or 6 months in prison, or both (reg 16). The Authority can instead impose an administrative penalty of 4,000 dollars (reg 17), plus 200 dollars a day while that penalty stays unpaid (reg 19). Filing a CbC report with inaccurate information that the filer knew about, or found later and did not take reasonable steps to correct, costs 5,000 dollars (reg 20). Economic Substance: a late ES return costs 5,000 dollars plus 500 dollars a day while it stays late (ES Act s.7(8A)). Failing the economic substance test costs 10,000 dollars, and 100,000 dollars for a later year (s.8(2) and (4)). The Grand Court can also order the entity to act or treat it as defunct or struck off (s.8(11)). Giving false or misleading information is an offence with a fine of 10,000 dollars or up to 5 years in prison, or both (s.13). The law says dollars and does not name the currency (Cayman Islands dollars are the local currency).

As of 27 October 2026 the Cayman Islands has no Pillar Two law. There is no Cayman top-up tax, no Cayman GloBE information return and no Pillar Two notification, so this file sets no Pillar Two deadline. Checks made on 27 October 2026: the legislation.gov.ky lists of recent Acts, regulations, amendments, Bills and Gazettes (to LG50 of 20 October 2026) show no such measure, and the DITC website has no Pillar Two advisory after an October 2020 OECD consultation notice. A Chambers guide written by Cayman lawyers (updated 16 July 2026) also says Pillar Two has not been adopted and no minimum tax has been announced. Some commercial websites say a Cayman domestic top-up tax has applied since 2025. No official source supports that. Cayman entities of a group with revenue of at least EUR 750m can still be counted in top-up taxes and GloBE returns in other countries, and those filings are made there.

CbC: a Cayman Constituent Entity of a group with consolidated revenue of at least USD 850m in the preceding fiscal year must notify the DITC by the last day of the group's fiscal year. The DITC asks for one notification covering all Cayman entities of the same group. Only a Cayman-resident Ultimate Parent Entity, or a Cayman-resident Surrogate Parent Entity when the conditions in reg 4(2) apply, files the CbC report, within 12 months after the fiscal year end. Both are filed on the DITC Portal. Economic Substance: every Cayman company, LLC, LLP, partnership and exempted limited partnership, and every registered foreign company and foreign limited partnership, files an annual ESN by 31 March. The DITC counts the ESN year as the year in which the financial year started, so a year ending 31 March 2026 has its ESN due 31 March 2026, not 2027. A relevant entity that carries on a relevant activity (banking, distribution and service centre, financing and leasing, fund management, headquarters, insurance, intellectual property, shipping or holding company business) must also file an ES return within 12 months after its financial year end. Domestic companies, local partnerships, investment funds and entities that are tax resident outside Cayman are not relevant entities. Deadlines: s.8(b) and (c) of the Interpretation Act (1995 Revision) moves a deadline that falls on a Sunday or a public general holiday to the next day that is neither. The ESN date of 31 March is a DITC administrative date and is not rolled here. Cayman also runs CRS and FATCA reporting, which is not covered here.