Who is exempt
The tax is a tax on tourists. The Tourist Accommodation (Taxation) Law (2013 Revision) treats a tourist as someone not ordinarily resident in the Islands who stays for up to six months. So a guest who lives in Cayman is not a tourist, and their stay is not taxed. In practice that covers:
- Caymanians - booking a staycation, putting up during a home renovation, or attending a family event.
- Legal residents - work permit holders, permanent residents and others whose immigration status lets them live in Cayman.
The condition that matters most: the resident has to be the one staying. Who made the booking or who paid is not the test.
Acceptable proof of status
You need evidence for every exempt stay. Department of Tourism (DoT) guidance lists documents such as:
- A Caymanian passport.
- A passport with a permit stamp.
- A permit letter together with photo ID.
- A voter registration card.
- A birth certificate together with photo ID.
A local phone number, a Cayman address on an Airbnb profile or a guest's word is not proof. Ask for the document before check-in - most local guests expect it and will send a photo. If a guest cannot or will not show proof, treat the stay as a tourist stay and charge the tax.
Handle the copies carefully. You only need enough to show status: you can ask the guest to cover document numbers they do not want to share, as long as the name, photo and status are visible. Store them securely and do not keep them longer than you need for your records.
Non-paying guests
The tax is 13% of what is paid for the room, so a stay where nobody pays has nothing to tax. DoT's filing guidance lets you exclude non-paying guests - friends, family, charity stays and prize stays - with proof.
- Friends and family: a short note of who stayed, the dates, and that no money was paid.
- Charity auction or donation stays: the charity's letter or the auction record showing the stay was donated.
- Prize stays: the competition terms or a letter from the organiser.
A "discount for friends" is not a free stay. If a guest paid anything for the room, tax applies to what they paid. And an owner staying in their own home is not a guest at all - a month with only owner use is covered in the guide to nil returns.
How to show exempt stays on the DoT return
Exempt stays still go on the monthly return. Leaving them off makes the return look incomplete next to your booking history; listing them shows DoT you accounted for every stay. On the DoT form:
| Column | For an exempt stay |
|---|---|
| A–G | Fill in as normal: dates, nights, reservation code, occupants, lead guest name. |
| H / I | Tick I (Local/Resident), not H (Tourist). For a non-paying guest, leave Tourist unticked and explain in Notes. |
| J | The total bill, if anything was paid. |
| L | 0, so the Column L total adds up only the taxable stays. |
| M | Tax: 0. |
| N | Notes: the reason, e.g. "Tax exempt - Caymanian, passport on file" or "Non-paying - family, no charge". |
Totals in Columns L and M then cover only the taxable stays, so the tax you pay matches the form. The column-by-column guide to the form covers the other fields. If a month's only check-outs were exempt, you still file a return listing them, with $0 tax.
You do not normally email the identity documents with the return. Keep them on file so you can produce them if DoT asks; if DoT asks you to include them, follow its instruction.
Records to keep
- The booking confirmation and what the guest paid.
- A copy of the proof of status, linked to the reservation code.
- For non-paying stays, the note, letter or record showing no charge.
- The signed return that lists the stay, and the email you sent it with.
File these with the month the guest checked out, since that is the return the stay appears on. When you sign the return you certify it is true and correct, and an exemption without proof is the easiest item on it to challenge.
Edge cases
A Caymanian books and pays for visitors
Taxable. If a Caymanian pays for a visitor's stay but does not stay themselves, the guests are tourists and the 13% applies. A common example is a local family booking a villa for overseas relatives coming for a wedding.
A mixed party
A Caymanian couple stays with friends visiting from abroad, all on one booking. The published guidance does not spell out how to split a single booking between resident and tourist occupants. Do not guess: before you file, ask DoT Accounts Receivable at ar@caymanislands.ky how they want it shown, keep their reply, and treat similar stays the same way afterwards. Until you have an answer, the cautious choice is to treat the stay as taxable.
A new work permit holder on a relocation stay
Someone who has just arrived on a work permit and is staying a few weeks while they find a long-term home lives in Cayman. With their permit stamp or permit letter and photo ID, the stay is exempt. Without the document yet, treat it as taxable.
A former resident visiting
A guest who used to live in Cayman but now lives abroad is a tourist unless they still hold a status document - a Caymanian passport, for example. Go by the documents, not by the guest's history with the island.
A company books for a resident employee
The test is who stays. If the occupant is a resident with proof, the stay can be exempt even though a company paid. If the company books for visiting staff or clients, they are tourists.
Pricing for local guests
Airbnb does not collect the Cayman tax, so many hosts add 13% to their nightly price or as a separate fee. If you do that, a local guest with proof should not be charged the tax portion - they are exempt, and you will not be paying it over. The simplest way is a special offer or adjusted price once the guest has sent their document. For the wider background on rules around short-term letting, see Cayman's short-term rental rules in 2026, and for the full tax picture, the Tourist Accommodation Tax guide.
In Hosts.ky you mark a booking as a local or resident stay and it goes on the return with the Local/Resident tick, $0 tax and a "Tax exempt" note, so the month's totals only include what you owe.