Tax Haven Cayman Islands

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The offshore financial services sector is a major component of the Cayman Islands which are renowned as fully developed tax havens. As tax havens, the Cayman Islands economy is based on a tax structure that provides investors and foreign nationals with a spectrum of opportunities for investing funds and protecting assets.

Country Overview

Cayman Islands tax haven is situated in the western Caribbean Sea and consists of Grand Cayman, Little Cayman and Cayman Brac. The Cayman Islands financial services sector is not only prominent within the Caribbean region but the world. Tax haven Cayman Islands developed into a leading offshore financial centre. As a British Overseas Territory, the islands have gained the confidence of people from countries all over the world; partly due to economic, social and political stability, the soundness of the legal system which is based on the English Common Law system and the business friendly environment. In tax haven Cayman Islands, no direct taxes are levied on domestic companies and residents. Most of the government’s revenue is generated from indirect taxes.

The Cayman Islands remained largely uninhabited until the 17th century. A variety of people settled on the islands, including pirates, refugees from the Spanish Inquisition, shipwrecked sailors, deserters from Oliver Cromwell’s army in Jamaica, and slaves. The majority of Caymanians are of African and British descent, with considerable interracial mixing.

Cayman Islands Fiscal Incentives and Advantages

In addition to the high level of infrastructural and economic development that he Cayman Islands has enjoyed thanks to a thriving tourism industry and offshore financial services sector, as tax havens the Cayman Islands appeal to investors and entrepreneurs internationally due to various factors. Not only do tax haven Cayman Islands deliver a range of asset managing services and tools, the Islands are endowed with:

  • Economic, political and social stability
  • Trained professionals
  • Modernized banking facilities
  • No exchange controls
  • No tax on offshore income and profits
  • No tax on dividends, interests, gifts and inheritance
  • Strategic location
  • Accessibility
  • Warm, peaceful people
  • Supportive business climate

Cayman Islands Offshore Legislative Framework

Legislative reform of tax haven Cayman Islands’ financial services sector has been a progressive process. Thus, offshore laws are up to date and integrate international standards and policies which ensure that offshore activities within the Caymans as tax havens take place in the proper setting and are of high standard. Tax haven Cayman Islands have a comprehensive series of offshore legislations which enhance the diversity and adaptability of its offshore vehicles and services.

Tax haven Cayman Islands’ offshore tax library includes the following:

  • Banks & Trust Companies Law (2009 Revision)
  • Special Trusts (Alternative Regime) Law
  • Companies Management Law (2003 Revision)
  • Insurance Law (2008 Revision)
  • Companies Law (2009 Revision)
  • Monetary Authority Law (2008 Revision)
  • Building Societies Law
  • Securities Investment Business Law (2004 Revision)
  • Mutual Funds Law (2009 Revision)

Cayman Island Offshore Services

The 2 fundamental aims of tax haven Cayman Islands include building sound international agreements for better cooperation with the United States and other countries and specializing in institutional business that would complement the offerings of private clients.

As a tax haven, the Cayman Islands focus on service areas such as:

  • International and offshore banking
  • Offshore trust formation
  • Vessel and aircraft registration
  • Exempted Limited Partnership formation
  • Exempted corporation creation, identical to Belize company formation
  • Non-resident enterprise construction, like Panama company formation
  • Captive insurance
  • Structured finance transactions
  • Patents and trade mark registration
  • Mutual fund registration
  • Asset management services

Cayman Islands Monetary Authority (CIMA)

The Cayman Islands Monetary Authority is the supervisory and regulatory body for international financial services and activities within the Cayman Islands as tax havens. The Authority was established and made law on January 1, 1997 under the Monetary Authority Law. CIMA operates its regulatory framework accordance with three main principles which were introduced in 2007: Rule, Statement of Principle and Statement of Guidance.

Under the concept of Rule, tax haven Cayman Islands CIMA sent out a clear order to licensees with regard to respecting and meeting regulatory standards, in default of which stiff punitive actions would be taken. The Statement of Principle further sets out the Authority’s what is expected from all licensees in the line of carrying out their respective offshore business, while the Statement of Guidance seeks to facilitate licenses in carrying on their activities in compliance with regulatory standards. These principles provide guidance notes on how offshore and financial operations conducted in or from with tax haven Cayman Islands.

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