UK/CAYMAN ISLANDS DOUBLE TAXATION ARRANGEMENT

This electronic version is provided for the convenience of reference only and has no official sanction.

SIGNED 15 JUNE 2009

Entered into force 20 December 2010

Effective in the United Kingdom from 1 April 2011 for corporation tax

from 6 April 2011 for income tax and capital gains tax

and from 15 December 2010 for other taxes

Effective in the Cayman Islands from 1 April 2011 for corporation tax

from 6 April 2011 for income tax and capital gains tax

 and from 15 December 2010 for other taxes

HM Revenue and Customs

December 2010

EXCHANGE OF LETTERS

BETWEEN THE GOVERNMENTS OF THE UNITED KINGDOM

AND THE CAYMAN ISLANDS

CONCERNING

AN ARRANGEMENT FOR THE AVOIDANCE OF DOUBLE

TAXATION AND THE PREVENTION OF FISCAL EVASION

15th June 2009

Sir,

I have the honour to propose to you –

? the Arrangement between the United Kingdom of Great Britain and

Northern Ireland and the Cayman Islands for the avoidance of

double taxation and the prevention of fiscal evasion (“the

Arrangement”) at Appendix 1 to this letter;

? that the Arrangement shall have effect in accordance with Paragraph

14 thereof;

? our mutual commitment to comply at the earliest date with our

internal procedures required by our respective domestic law for the

bringing into force of the Arrangement and to notify each other

without delay through the formal channels when such procedures

are completed.

I have the honour to propose that, if the above is acceptable to the

Government of the Cayman Islands, this letter and Appendix 1 together

with your reply will constitute our mutual acceptance of the provisions of

the Arrangement.

The United Kingdom welcomes this Arrangement as a significant step in

establishing the Cayman Islands’ status as a jurisdiction which complies

with international standards in the field of taxation, and recognizes the

Cayman Islands’ commitment to transparency and effective exchange

of information in tax matters and to continued progress in this area.

Please accept, Sir, the assurance of our highest consideration,

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Sir,

I have the honour to acknowledge receipt of your letter of 15th June

2009, which reads as follows:

“ Sir,

I have the honour to propose to you –

? the Arrangement between the United Kingdom of Great Britain and

Northern Ireland and the Cayman Islands for the avoidance of

double taxation and the prevention of fiscal evasion (“the

Arrangement”) at Appendix 1 to this letter;

? that the Arrangement shall have effect in accordance with Paragraph

14 thereof;

? our mutual commitment to comply at the earliest date with our

internal procedures required by our respective domestic law for the

bringing into force of the Arrangement and to notify each other

without delay through the formal channels when such procedures

are completed.

I have the honour to propose that, if the above is acceptable to the

Government of the Cayman Islands, this letter and Appendix 1 together

with your reply will constitute our mutual acceptance of the provisions of

the Arrangement.

The United Kingdom welcomes this Arrangement as a significant step in

establishing the Cayman Islands’ status as a jurisdiction which complies

with international standards in the field of taxation, and recognizes the

Cayman Islands’ commitment to transparency and effective exchange

of information in tax matters and to continued progress in this area.

Please accept, Sir, the assurance of our highest consideration,”

I am able to confirm that the Government of the Cayman Islands is in

agreement with the contents of your letter dated 15th June 2009 and

that this letter constitutes our mutual acceptance and making of the

Arrangement contained in Appendix 1 to your letter and appended to

this letter.

Please accept, Sir, the assurance of our highest consideration,

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15th June 2009

ARRANGEMENT BETWEEN THE GOVERNMENT OF THE UNITED

KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE

GOVERNMENT OF THE CAYMAN ISLANDS FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION

 The Government of the United Kingdom of Great Britain and Northern Ireland

and the Government of the Cayman Islands (“the Governments”);

 Desiring to conclude an Arrangement for the avoidance of double taxation and

the prevention of fiscal evasion;

 Have arranged as follows:

1. Persons covered

This Arrangement shall apply to persons who are residents of one or both of the

Territories.

2. Taxes covered

The taxes to which this Arrangement shall apply are the following United Kingdom

taxes

a) the income tax;

b) the corporation tax;

c) the capital gains tax; and for the purposes of Paragraph 13 only:

d) the inheritance tax;

e) the value added tax;

and any taxes which are identical or substantially similar to those taxes which are

imposed by either Territory after the date of signature of this Arrangement. The

competent authorities of the Territories shall notify each other of any significant

changes that have been made in their taxation laws.

3. General definitions

1. For the purposes of this Arrangement, unless the context otherwise requires:

 a) the term “United Kingdom” means Great Britain and Northern Ireland,

including any area outside the territorial sea of the United Kingdom

designated under its laws concerning the Continental Shelf and in

accordance with international law as an area within which the rights of the

United Kingdom with respect to the sea bed and sub-soil and their natural

resources may be exercised;

 b) the term “the Cayman Islands” means the territory of the Cayman Islands

and includes its territorial sea and any areas beyond its territorial sea

within which sovereign rights with respect to the sea bed and sub-soil and

their natural resources may be exercised in accordance with international

law;

 c) the terms “a Territory” and “the other Territory” mean the United

Kingdom or the Cayman Islands, as the context requires;

 d) the term “person” includes an individual, a company and any other body

of persons;

 e) the term “competent authority” means

 (i) in the United Kingdom: the Commissioners for Her Majesty’s

Revenue and Customs or their authorised representative;

 (ii) in the Cayman Islands: the Cayman Islands Tax Information

Authority;

 f) the term “company” means any body corporate or any entity that is treated

as a body corporate for tax purposes or which is otherwise treated as a

body corporate under the law of a Territory;

 g) the term “enterprise” applies to the carrying on of any business;

 h) the term “enterprise of a Territory” and “enterprise of the other Territory”

mean respectively an enterprise carried on by a resident of a Territory and

an enterprise carried on by a resident of the other Territory;

 i) the term “international traffic” means any transport by a ship or aircraft

operated by an enterprise which is a resident of and has its place of

effective management in a Territory except where the ship or aircraft is

operated solely between places in the other Territory.

2. As regards the application of this Arrangement at any time by a Territory, any

term not defined therein shall, unless the context otherwise requires, have the meaning

that it has at that time under the law of that Territory, any meaning under the

applicable tax laws of that Territory prevailing over a meaning given to the term

under other laws of that Territory.

4. Resident

1. For the purposes of this Arrangement, the term “resident of a Territory” means

 a) in the case of the United Kingdom, any person who, under its laws, is

liable to tax therein by reason of his domicile, residence, place of

management, place of incorporation or any other criterion of a similar

nature, and also includes the United Kingdom, and any political

subdivision or local authority thereof. This term, however, does not

include any person who is liable to tax in the United Kingdom in respect

only of income or capital gains from sources therein;

 b) in the case of the Cayman Islands, any person who, under its laws, is

recognised as a resident by reason of his domicile, residence, place of

incorporation, place of management, or any other criterion of a similar

nature and also includes the Cayman Islands.

2. Where by reason of the provisions of subparagraph 1 a person is a resident of

both Territories, then that person shall be treated for the purposes of this Arrangement

as a resident of the United Kingdom only.

3. Persons to whom subparagraph 2 applies shall not be subjected in the United

Kingdom to taxation which is more burdensome than the taxation which applies to

residents of the United Kingdom in the same circumstances to whom subparagraph 2

does not apply.

5. Business profits of individuals

1. Business profits derived by an individual shall be taxable only in the Territory in

which he is resident unless he undertakes business in the other Territory. If he

undertakes such business, his profits may be taxed in that other Territory, but only so

much of them as is attributable to that business.

2. In determining the profits of such individual, there shall be allowed as

deductions expenses which are incurred for the purposes of his business, including

executive and general administrative expenses so incurred, whether in the Territory in

which the he undertakes the business or elsewhere.

3. Where profits include items of income which are dealt with separately in other

Paragraphs of this Arrangement, then the provisions of those Paragraphs shall not be

affected by the provisions of this Paragraph.

4. No provision of this Paragraph shall be construed as restricting the right of a

Territory to tax its residents.

6. Profits and gains from shipping and air transport

1. Profits of an enterprise of a Territory from the operation of ships or aircraft in

international traffic shall be taxable only in that Territory.

2. Gains derived by a resident of a Territory from the alienation of ships or aircraft

operated in international traffic by an enterprise of that Territory, or moveable

property pertaining to the operation of such ships or aircraft, shall be taxable only in

that Territory.

3. The provisions of subparagraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

7. Pensions

1. Subject to the provisions of subparagraph 2 of Paragraph 8 (Government

service), pensions and other similar remuneration paid to an individual who is a

resident of a Territory, shall be taxable only in that Territory.

2. Notwithstanding the provisions of subparagraph 1, such payments which arise in

the other Territory may also be taxed in that other Territory where the recipient has

not been continuously a resident of the first-mentioned Territory either

a) for a period of 6 years immediately before the commencement of the

payment of that pension, or

b) for a period of 6 years immediately before the commencement

 of the employment to which the pension relates.

8. Government service

1. a) Salaries, wages and other similar remuneration paid by a Territory or a

political subdivision or a local authority thereof to an individual in respect

of services rendered to that Territory or subdivision or authority shall be

taxable only in that Territory.

 b) However, such salaries, wages and other similar remuneration shall be

taxable only in the other Territory if the services are rendered in that

Territory and the individual is a resident of that Territory who did not

become so resident solely for the purpose of rendering the services.

2. a) Notwithstanding the provisions of sub-paragraph 1, pensions and other

similar remuneration paid by, or out of funds created by, a Territory or a

political subdivision or a local authority thereof to an individual in respect

of services rendered to that Territory or subdivision or authority shall be

taxable only in that Territory.

 b) However, such pensions and other similar remuneration shall be taxable

only in the other Territory if the individual is a resident of that other

Territory and has been continuously a resident of that other Territory

either

 (i) for a period of 6 years immediately before the commencement

of the payment of that pension, or

 (ii) for a period of 6 years immediately before the commencement

of the employment to which the pension relates.

3. This Paragraph does not apply to salaries, wages, pensions, and other similar

remuneration in respect of services rendered in connection with a business carried on

by a Territory or a political subdivision or a local authority thereof.

9. Students

Payments received by a student or business apprentice who immediately before

visiting a Territory was a resident of the other Territory under the laws of that other

Territory, and who is present in the first-mentioned Territory solely for the purpose of

his full-time education at a university, college or other recognised educational

institution of a similar nature, or for his full-time training, shall not be taxed in that

first-mentioned Territory, provided that such payments arise outside that firstmentioned Territory, and are for the purpose of his maintenance, education or

training. The exemption from tax provided by this Paragraph shall apply to a business

apprentice only for a period of time not exceeding one year from the date he first

arrives in the first-mentioned Territory for the purpose of his training.

10. Other income

Items of income not dealt with in the foregoing Paragraphs of this Arrangement

arising in a Territory and paid to a resident of the other Territory may be taxed in the

first-mentioned Territory.

11. Elimination of double taxation

1. Where a resident of a Territory derives profits, income or gains which, in

accordance with the provisions of this Arrangement, may be taxed in the other

Territory, the first-mentioned Territory shall, subject to any provisions of its law

regarding the allowance as a credit against its tax of tax payable in another territory

(which shall not affect the general principle hereof), allow as a deduction from the tax

on the income of that resident, an amount equal to the tax paid in that other Territory.

Such deduction shall not, however, exceed that part of the tax, as computed before the

deduction is given, which is attributable to the income, profits or gains which may be

taxed in that other Territory.

2. For the purposes of this Paragraph, profits, income and gains owned by a

resident of a Territory which may be taxed in the other Territory in accordance with

this Arrangement shall be deemed to arise from sources in that other Territory.

12. Mutual agreement procedure

1. Where a person considers that the actions of one or both of the Territories result

or will result for him in taxation not in accordance with the provisions of this

Arrangement, he may, irrespective of the remedies provided by the domestic law of

those Territories, present his case to the competent authority of either Territory.

2. The competent authority shall endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at a satisfactory solution, to resolve the

case by mutual agreement with the competent authority of the other Territory, with a

view to the avoidance of taxation which is not in accordance with this Arrangement.

Any agreement reached shall be implemented notwithstanding any time limits or

other procedural limitations in the domestic law of the Territories, except such

limitations as apply for the purposes of giving effect to such an agreement.

3. The competent authorities of the Territories shall endeavour to resolve by

mutual agreement any difficulties or doubts arising as to the interpretation or

application of this Arrangement. They may also consult together for the elimination of

double taxation in cases not provided for in the Arrangement.

4. The competent authorities of the Territories may communicate with each other

directly for the purpose of reaching an agreement in the sense of the preceding

subparagraphs.

13. Exchange of information and tax examinations

1. The competent authorities of the Territories shall exchange such information as

is foreseeably relevant for carrying out the provisions of this Arrangement or to the

administration or enforcement of the domestic laws of the Territories concerning

taxes covered by this Arrangement imposed on behalf of the Territories insofar as the

taxation thereunder is not contrary to the Arrangement. The exchange of information

is not restricted by Paragraph 1.

2. Any information received under subparagraph 1 by a Territory shall be treated

as confidential in the same manner as information obtained under the domestic laws

of that Territory and shall be disclosed only to persons or authorities (including courts

and administrative bodies) concerned with the assessment or collection of, the

enforcement or prosecution in respect of, the determination of appeals in relation to

the taxes covered by this Arrangement, or the oversight of the above. Such persons or

authorities shall use the information only for such purposes. They may disclose the

information in public court proceedings or in judicial decisions. Notwithstanding the

foregoing, information received may be used

 a) for other tax purposes with the express written consent of the competent

authority of the Territory that provided the information; and

 b) for any other purposes when such information may be used for such

purposes under the laws of both Territories and the competent authority of

the Territory that provided the information authorises such use in writing.

3. Information received under subparagraph 1 by a Territory shall not be disclosed

to any other jurisdiction.

4. In no case shall the provisions of subparagraphs 1 and 2 be construed so as to

impose on a Territory the obligation

 a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Territory;

 b) to supply information which is not obtainable under the laws or in the

normal course of the administration of that or of the other Territory;

 c) to supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or

information the disclosure of which would be contrary to public policy.

5. If information is requested by a Territory in accordance with this Paragraph, the

other Territory shall use its information gathering measures to obtain the requested

information, even though that other Territory may not need such information for its

own tax purposes. The obligation contained in the preceding sentence is subject to

the limitations of subparagraph 4 but in no case shall such limitations be construed to

permit a Territory to decline to supply information solely because it has no domestic

interest in such information.

6. In no case shall the provisions of subparagraph 4 be construed to permit a

Territory to decline to supply information solely because the information is held by a

bank, other financial institution, nominee or person acting in an agency or a fiduciary

capacity or because it relates to ownership interests in a person.

7. A Territory may, in accordance with its law and pursuant to any procedures

agreed by the competent authorities, allow representatives of the competent authority

of the other Territory to enter its jurisdiction in order to interview persons, examine

records or to conduct a tax examination in its jurisdiction.

14. Entry into force

1. Each of the Territories shall notify the other of the completion of the procedures

required by its law for the bringing into force of this Arrangement. The Arrangement

shall enter into force on the date of the later of these notifications and shall thereupon

have effect

 a) in the United Kingdom:

 (i) in respect of income tax and capital gains tax, for any year of

assessment beginning on or after 6th April next following the

date on which this Arrangement enters into force;

 (ii) in respect of corporation tax, for any financial year beginning

on or after 1st April next following the date on which this

Arrangement enters into force;

 (iii) in respect of other taxes, for charges to tax arising on or after

the date on which this Arrangement enters into force; and

 b) in the Cayman Islands: on those same dates.

2. The provisions of this Arrangement shall not impose upon a Territory any

obligation to provide information under Paragraph 13 in respect of a taxable period or

charge to tax as the case may be occurring prior to the later of the notification dates

referred to in subparagraph 1.

15. Termination

1. This Arrangement shall remain in force until terminated by one of the

Territories. Either of the Governments may on or before 30th June in any calendar

year, give notice of termination to the other Government and, in such event, this

Arrangement shall cease to have effect

 a) in relation to relief from double taxation, at the end of the year of

assessment or financial year immediately following receipt of that notice;

 b) in relation to other matters, from the date of receipt of the notice.

2. In the event that this Arrangement is terminated,

a) all requests for information under Paragraph 13 received up to the

effective date of termination will be dealt with in accordance with the

terms of the Arrangement; and

b) the Territories shall remain bound by the confidentiality provisions in

Paragraph 13 with respect to any information obtained under the

Arrangement.

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