Cayman Islands Cabinet members agreed this week to extend tax breaks on trade and business licensing fees to small and “micro” businesses as part of an effort to boost local startups.
The fee reduction, which has now been continued through Aug. 31, 2016, is similar to what government approved in the last budget year.
Micro businesses – those employing no more than four people, excluding the owner – on all three islands are eligible to receive a 100 percent reduction on the licensing fees during the next year. The definition also includes “mobile businesses” – those conducted via a pedal cycle, motorcycle or motor vehicle.
The micro businesses must have maintained annual gross revenues below $250,000 for the previous year. They also must have a certificate of good standing from the National Pensions Office, be up to date on health insurance payments for employees and have kept up on previous trade and business licensing requirements.
Small businesses are also eligible for a somewhat lesser reduction in licensing fees. Small businesses are defined as those that employ up to 12 people, excluding the owner, and which did not earn more than $750,000 the previous year. They also must be up to date on healthcare, pensions and licensing requirements.
Small businesses in West Bay and George Town can receive up to 50 percent off trade and business licensing fees. Bodden Town, North Side and East End small businesses can get up to 75 percent off those fees.
In Cayman Brac and Little Cayman, a 50 percent reduction for trade and business licensing fees is already in effect. However, an additional reduction is available to small businesses there over the next year for companies in good standing.
The trade and business licensing fee cuts are not available to companies that provide auditing or financial services.
Commerce Minister Wayne Panton said earlier this year that the reduction in fees appeared to lead to a noticeable rise in small business registrations.
A total of 1,467 trade and business licenses were granted through May 26, 2015, compared to 713 for the same period of 2014, Mr. Panton said. The minister said the numbers showed that the incentive fee program “is working” and has had “a great deal of success.”
The program costs government approximately $1.4 million in foregone revenue.
Minister Panton said government is focusing on small businesses to generate more economic activity and reduce unemployment.
“We know that small businesses by and large create the greatest numbers of jobs in the economy. And by helping them to be stronger and more successful, we are also enabling them to be the engine of economic activity and employment,” he said.