Do banks in the Cayman Islands charge their customers stamp duty on point of sale (POS) transactions purchased via debit card? Where in the Stamp Duty Law does it allow this?
Auntie’s answer: I will answer your second question first since that is more straightforward. Section 3.1 of the Stamp Duty Law says, “There shall be charged for the revenue of the Islands stamp duties upon the instruments specified in the Schedule at the rates therein prescribed.”
If you take a look at the Schedule on the bottom of page 32 of the law, there is an item called receipts, that are “Bank receipts for withdrawal of funds on deposit”, for which 25 cents is charged. A helpful Cayman Islands Monetary Authority (CIMA) official explained the implications for bank transactions. When you use your debit card for a point of sale purchase, you are basically removing funds from your account. As that relates to your question, that is considered withdrawing funds on deposit and so is liable to stamp duty.
The law does not mandate who should bear the cost of the stamp duty, the customer or the bank, only that it is required that the fee be remitted to the government.
When it comes to figuring out whether banks charge customers this fee, however, there is not one clear answer. CIMA keeps an updated list of many of the bank fees, and I have included a link to that below. Under “Point of Sale (local)”, you can see the fees charged by the six retail banks operating in Cayman.
Here is where it gets a little murky, though. Two banks say there is no charge for POS, one says there is a charge plus the additional 25 cents for stamp duty, and two others list charges but don’t mention stamp duty at all.
A few points to note: It is not entirely clear if you will be charged separately for stamp duty when a bank doesn’t list that fee. And, if a charge is listed that is not referred to as stamp duty, it is not clear if the bank will be charging you an additional 25 cents or if the stamp duty is absorbed in the charge.
In addition, it is theoretically possible that some of the banks are footing the stamp duty bill themselves and not passing that on to their customers. I find that last scenario highly unlikely, though, and if you want to be sure about what a specific bank charges in relation to stamp duty, I think it is best for you to call and ask.
List of Retail Bank Fees as at 1 May 2019
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Years ago one bank charged the stamp duty on debit card transactions from your chequing account but not your savings account. (When they were still treating debit cards like cheques basically.) Yes, they eventually figured it out, but it was a good run for a while.
One thing the fees do (for some of us) is keep us from swiping for small purchases.
And like others have said I don’t begrudge the 25c tax. Especially since the bank fees are generally higher each month than my stamp duty. Now those fees are where it gets exorbitant.
Its time the USD/KYD spread was reduced to 80/82. The banks have been making an absolute fortune over the years at 80/84. Its probably the highest bid/ask spread of any country in the world.
The merchants are using 0.80 for debit/credit cards transcations, they should be using 0.82 but they moved to 0.80 and no-one said anything,. Banks use 82/84.
Stamp duty (25c) is paid to government on all purchases except when cash is used. It should not be charged/paid when moving funds between your own accounts.
So if you pay for goods or services by cheque, debit, or e-payment the “tax” is charged. The money has moved from you to another entity.
The stamp duty tax is also charged on each cash withdrawal and paid to government.
Most banks also charge a transaction fee for the processing of these items.
Thieves, the lot of them. I understand it’s a small market, but the creaming off of these fees is ridiculous. It’s not as if you can take your indignation to a competitor, as they’re all terrible. It’s like the cellular services here, crummy and expensive.
It’s Government fee…
How the fee is collected is down to the banks, therefore this wouldn’t be a story. So they may be government fees, but some banks absorb them, others don’t. The point still stands. Banks cream off masses of profits, and still hit personal banking consumers wherever possible.
Follow-up question. Are banks allowed to charge stamp duty for inter account transfers? For example moving monies from a savings account to a checking account. I sometimes do not have any transactions (in a month) other than that single account movement and am still being charged stamp duty. (BTW the deduction is coded as Stamp Duty)
Thank you for this information! Apparently none of our legislators are concerned as to whether or not the population is being ripped off.
I usually pull out a week’s cash every weekend.
But in the rare case I need to swipe my card for a small puchase, the 25c doesn’t bother me. It’s going back to my country and not a private organization at least. (I use CNB debit correct me if im wrong but the 25c goes to our coffers not them)
Your 25c going straight to Trindad
Nope, it gets paid to Government.