Cayman IslandsCayman Islands Tax Haven – Good or Bad?

https://www.tetraconsultants.com/wp-content/uploads/2022/01/pexels-jopwell-2422282.jpg

The Cayman Islands consists of 3 main islands that form its entirety and are under the sovereignty of the United Kingdom. The islands are popular tourist destinations, naturally allowing its tourism sector to become one of the country’s main contributors of its economy. However, being a popular tourist destination is not enough to define the Cayman Islands. The country has ​​managed to develop a mature financial services sector and together with its ideal tax neutrality environment, has managed to attract many foreign investors to register company in Cayman Islands.  In 2019, 88.8% of Cayman Islands GDP production came from the products and service industry, with financial services contributing a whopping 30.4%. The islands also presents the highest quality of life and GDP production amongst its Caribbean neighbours, recording an estimated amount of USD 5.3 billion GDP production in 2021. Before you decide to register company in Cayman Islands, follow along Tetra Consultants to find out more about the Cayman Island tax haven and if it has the right reasons for you to register your company in.
guide-to-types-of-companies-in-canada

The Good of Cayman Islands Tax Haven

#1 Greater Earnings:

Why do companies register in Cayman Islands? One of the main reasons attributed to it is the tax neutrality environment that the Cayman Islands provide, compelling many to associate the Cayman Islands as a tax haven locality. For firms who are looking to register their company in the jurisdiction, they stand to gain significant benefits from the Cayman Island tax haven. The Cayman Island tax haven benefits are applicable to most entities, be it locally owned or 100% foreign ownership. Companies in the Cayman Islands are not subjected to corporation taxes, capital gain taxes, income taxes, property taxes or withholding taxes for their conduct of business in this jurisdiction. Instead, the government primarily develops its budget and national reserves through the focus on custom duty fees as well as various licensing fees. With these considerations, many firms or foreign investors choose to set up in the Cayman Islands given its low tax requirements as it can pose greater returns and earnings to them.

#2 Ease of Doing Business in the Cayman Islands :

Another “good” of registering a company in the Cayman Islands tax haven is because of the ease of doing business in this jurisdiction. Apart from its tax neutrality environment, the government of the Cayman Islands has also made it easy for many investors who are willing to incorporate, maintaining an open attitude towards welcoming Foreign Direct Investments (FDI). For firms wishing to register in the Cayman Island tax haven, you can expect your company registration to be completed within 1-4 working days given that all due diligence documents are in order. Additionally, incorporation and registration fees charged are considered to be generally low when compared to its Caribbean neighbours.

Furthermore, companies that choose to incorporate in the Cayman Island tax haven need not require a resident director to be appointed. Corporate laws in the Cayman Islands tax haven allows the formation of a company with only a single director and shareholder, of which any individual can hold both positions as well.  There are also no additional executive or managerial roles such as a Board of Directors or resident manager required to be appointed prior to the setting up of the company. Investors also stand to benefit as there are no capitalization prerequisites to be put upfront, unlike starting up in other countries.

The Bad of Cayman Islands Tax Haven
#1 Economic Substances Regulations:

The “bad” about registering a company in the Cayman Islands tax haven is the additional economic substance regulations applied to firms registered in Cayman Islands. In 2018, the government of the Cayman Islands passed The International Tax Co-operation (Economic Substance) Law, in efforts of aligning with the Organisation for Economic Co-operation and Development (OECD)’s Forum on Harmful Tax Practices. In essence, the economic substance requires firms who fall under the law to prove that their core income generating activity happens in Cayman Islands itself, evaluating its legitimacy of operating and registering a business in the country. The aim of the economic substance regulation is to mitigate harmful tax practices or instances of profits shifting, as now firms have to prove a series of activities in relation to their line of business operations. Some of the tests include proving: adequate amount of operating expenditure incurred in the Islands, maintaining an adequate number of employees in the Islands, adequate number of board level meetings occurring as well as recording of all the meeting minutes which are to be kept in the Islands.

#2 Notorious Reputation:

The Cayman Islands tax haven carries along a notorious reputation, given its traditionally tax neutral environment which has unfortunately encouraged different firms to conduct illicit activities such as tax evasion. On this note, there have been efforts to remove this association and improve the reputation of the country. However, the country still faces strong condemnation especially since it was removed from the 2020 European Union tax haven blacklist. Thus, registering a company in the Cayman Islands might subject your company to poor business reputation and secrecy.

Conclusion:

Engage Tetra Consultants as we make your registration of business in Cayman Islands a smooth and hassle-free process. The team provides a comprehensive service package that includes planning and strategizing with our clients to select a suitable business entity, completing the registration and documentation processes, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations. 

Contact us to find out more about company registration in Cayman Islands and our dedicated and experienced team will revert within the next 24 hours.

Tetra Consultants

Tetra Consultants is the consulting firm that works as your advisor and trusted partner in your business expansion. We tell our clients what they need to know, instead of what they want to hear. Most importantly, we are known for being a one-stop solution for our valued clients. Contact us now at enquiry@tetraconsultants.com for a non-obligatory free consultation. Our team of experts will be in touch with you within the next 24 hours.

Leave a Reply

Your email address will not be published. Required fields are marked *

15 + nineteen =

Follow us on

Address

22 Sin Ming Lane #06-76 Midview City, Singapore 573969

©2010-2022 Tetra Global Consultants. All rights reserved.

  • Contact Us

    Contact Form

  • WhatsApp