Correct. Expedia is not renting it's own inventory; it is renting Reef's inventory. That puts it into Cayman jurisidiction.
Do you see the difference? Cayman has every right to collect a tax from owners who are domiciled in the Caymans or when the transaction occurs in the Caymans. They have ZERO jurisdiction over what happens outside the Caymans.
Of course, the Caymans has every right to collect a transient occupancy tax from visitors to the Caymans. They can easily enforce that by requiring the resorts to collect and remit the tax.
But they have no authority to tax business transactions by non-Cayman's domiciled entities unless those transactions occur inside the Caymans.
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This is the same as if a Caymans corporation has stock listed on the New York Stock Exchange. The Caymans would have no authority to require sellers of the stock to pay a sales tax to the Cayman's on the sale of the stock, nor would the Caymans have authority to require the NYSE to collect and remit a sales tax on purchases of securities in that company. The Cayman's certainly could require that same company, however, to pay a transfer tax whenever the Company processed a transfer of ownership in stock certificates. They could also require Caymans residents to pay a tax whenever they purchased or sold those same shares. But they can't extend that taxing jurisdiction to alien non-residents.
I'm going to agin (glutton for punishment, clearly !)
Expedia is renting timeshare and condo owner (and only some developer) inventory...theReef is a mixed use property, with upwards of 90% of inventory independently owned by our timeshare/condo owners.
Any inventory put up for rent has to be licenced to do so, and the licencing process is onerous and is done by the company that manages the resort/rental programme.
That management company is responsible not only for maintaing standards, passing inspections etc (all the legal licencing stuff), but also ensuring that all rentals have tax collected on the rate charged and that the tax is remitted within 28 days of month end together with detailed reporting of same.
As a matter of interest, if the payment is late, there is a late payment/reporting charge.. of 20%... not 20% per annum, a flat 20%...how is that for a late penalty !
Now, timeshare owners can (in practice) skirt this by renting privately and just telling the resort their renter is a "guest". As a practical matter, it is very difficult to enforce the law if this is done... but when owners (whether timeshare owners, whole condo owners or whatever) are publically advertising rentals (whether on their own website, VRBO, Ebay, Redweek, whatever), they are clearly flouting the law.
If (say) Disney Vacation Club operated a rental programme for owner inventory in Orlando and I booked that, I'd have to pay whatever rental taxes are levied by the authorities (in Cayman it is 10% of rental income), Disney would collect them (as managers) and remit them.
If on the other hand I rented a week direct from an owner and there was a different tax on timeshare occupancy to that charged on rentals (say $10 a day to compare to Cayman), they'd be collecting that from me as they would consider my use "timeshare usage".
A 2BD unit at The Reef costs thousands of dollars per week to rent, so 10% rental tax is a whole lot more than $10 timeshare tax, so one can see how this issues interests the government here.
This thread all started as a result of me trying to give some owners a heads up that this is definitely on the radar for the Cayman government...
In closing, at theReef we DO have a very successful rental programme and the vast majority of our owners consider their usage options in this order :
a) Owner use
b) Rental through the rental programme
c) Exchange last.....
II does a great job for our owners and we have good exchange power, but at the end of the day most people prefer cold hard cash to an exchange, especially when the rental programme does the job.
Let's be honest here, how many timeshare owners can honestly say that their resort does that well with their owner rental programme that they would think to rent it through the resort before exchanging ? It truly is one of our strengths
