Cayman Islands

  • Posted By : Admin
  • April 18, 2018
  • Tax havens
  • 0 Comments

Cayman Islands is a territory dependent on the British Crown in the Caribbean Sea bordering Jamaica, Cuba and part of the coast of Honduras. For decades the Cayman Islands have given refuge to the world's main fortunes, being a favorite jurisdiction for the development of businesses related to stock market investments, foreign currency exchange and real estate investments.

General information

Capital
George Town
Official language
English
Area
264 km2
Form of government
British Overseas Territory (Parliamentary Monarchy)
Currency
Cayman Islands Dollar and US$
UTC time zone
UTC - 5
Legal system
Legislation based on English Common law


Taxes for non-residents in Cayman Islands

Cayman Islands maintain favorable tax laws for foreign investment in the country. It is considered a tax haven and natural and legal persons that do not reside in the country and whose incomes don´t not come from its territory are not obliged to pay tax. Investors who decide to open a bank account or register a company in Cayman Islands will not pay taxes such as rent, corporation taxes, VAT, inheritance, donations and will not suffer the dreaded tax deductions for subsequent years. Investors who decide to invest in Cayman Islands and repatriate the money to their country of residence can save taxes throughdouble taxation agreements.

Characteristics of Cayman Islands Companies

Types of companies
In Cayman Islands there are two types of companies: Exempt company and non-resident company.
Share capital
There are no minimum share capital requirements. But it is very common to register a company with unpaid minimum capital of USD 50,000 without disbursement.
Constitution time
13 days
Taxes
The companies whose income was not generated from the territory of Cayman Islands are exempt from all types of taxes for a period of 20 years.
Directors
1 director minimum. The director can be an individual resident of any country.
Shareholders
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Shares
Registered and without par value. Bearer shares can not be issued by the exempt company.
Legal address
Any company registered in Cayman Islands must have its legal address on the territory of the country. When the director of the company is a foreigner, a registered resident agent must be appointed, whose function will be to receive communications from governmental authorities.
Privacy
In the Cayman Islands, commercial registry is not public. The only information available for third parties is the name and type of company, date of incorporation and its address.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
It is required to keep accounting records, however, the submission of annual accounts or auditing of accounts is not mandatory.

Financial system in Cayman Islands

Financial services
Banks in Cayman Islands are specialized in e-commerce, stock exchange investments, currency exchange; also the customer may request any type of financial services: checking accounts, savings accounts, virtual pos, credit cards, foreign currency accounts, investment accounts in Stock market, credits and Mortgages.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Cayman Islands can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Banks in Cayman Islands cover up to $ 50,000 of customer deposits.

Automatic information exchange in Cayman Islands 

Cayman Islands has signed the automatic exchange of information treaty that has entered into force on January 1 of 2018. Also the country has signed 44 bilateral automatic exchange agreements. 

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


The treaty of automatic exchange of information does not affect the fiscal status of the country, that is, if the tax laws in Cayman Islands establish that physical persons and non-resident companies pay 0% of taxes, the signing of the treaty will not make it pay taxes in Cayman Islands. The treaty of automatic exchange of information is presenting many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, United Arab Emirates is interested in exchanging information with Cayman Islands but Cayman Islands is not interested in reporting information to United Arab Emirates, there will be NO information exchange and clients privacy will be protected. Currently, 18-04-2018 Cayman Islands has signed 44 bilateral treaties to automatically exchange information. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Cayman Islands

Year 2017
Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Colombia, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Greece, Greenland, Hungary, Iceland, India, Ireland, Italy, Japan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Monaco, Holland, Norway, Portugal, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, United Kingdom, Uruguay.
Year 2018
No bilateral agreement has been signed for 2018.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Cayman Islands, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Cayman Islands reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Cayman Islands

Cayman Islands is one of the best offshore jurisdictions to invest for the following reasons: 

  • There is no need to pay any kind of tax. 
  • Legal security guaranteed by law. 
  • Privacy. 
  • Specialized jurisdiction in stock market. 
  • Good telecommunications infrastructure. 
  • Little bureaucracy when it comes to obtaining financial licenses, companies formation and bank accounts opening. 
  • There is no restriction by nationality. 
  • Excellent geographical location. 
  • Economically stable financial center
  • Banks with strict regulations.