The Cayman Islands, an island group and overseas territory of the United Kingdom is one of the largest financial centres and a major tax haven in the world. It has attracted a lot of business in the area making it a thriving centre to do business. With a thriving financial hub, stable economic and political scene, and a tax neutral environment, it has become a place of choice for many businesses to set up offshore companies in the area.
In this article we will be covering the following points:
- Overview of the Cayman Islands
- Exempted Companies Offshore Company Set-up
- Benefits of setting up an offshore company in Cayman Islands
- Procedure for Registration
Overview of Cayman Islands
The Cayman Islands used to be colonised from Jamaica by the British from the 18th to 19th centuries, after which they remained a British dependency in 1962 after Jamaica gained independence.
The Cayman Islands, apart from being a very popular tourist destination, is also the leading dominant financial hub and is one of the only four countries outside the G20 to hold the position in the top 25 Global Financial Centres in the world. It is also one of the top tax havens destinations because of the legislation put in place by the jurisdiction.
As such, the Cayman Islands is an ideal place for investors and business owners to consider setting up an offshore company. In this article, we will be covering the area of exempted companies offshore set-up.
Exempt Company Formation
There are several types of companies that you can set-up in the Cayman Islands. These include:
- Exempted Company
- Exempted Limited Duration Company
- Exempted Limited Partnership
- Ordinary Non-Resident Company
- Segregated Non-Portfolio Company
For the purposes of this article, we will be focusing more in-depth on the formation of an Exempt Company.
The Exempt Company is the most commonly used business form by foreign investors for offshore company set-up as they can leverage on the local business advantages while mostly engaging in activities outside of the Cayman Islands.
The features of this particular type of offshore set-up with respect to the Cayman Islands are as follows:
- Foreign-owned: Can be 100% foreign-owned, with no residency requirements
- Limited Liability: Founders are only liable to the amount they invested in the company
- Share Capital Requirements: No requirements for share capital upon incorporation
- Minimum Account Reporting Requirements: Account reporting requirements kept at a minimum
- Confidentiality: Details about company shareholders are not disclosed publicly
Benefits of setting up an offshore company in the Cayman Islands
1. Tax Exemptions
The Cayman Islands has the reputation of being a tax haven and rightfully so, with all the tax exemptions enforced in the jurisdiction. These tax exemptions include income tax, corporate tax, capital gains taxes, gift taxes, inheritance taxes, wealth tax, or any other tax for a company exclusively conducting business outside of the islands. This makes it attractive for investors to set up their business in the Cayman Islands.
Exempted companies are also eligible for the Tax Exemption Certificate which protects them from being taxed in the event where taxes are ever introduced in the future. This adds another level of assurance to corporations who want to set up an offshore office in the Cayman Island.
2. Fast Incorporation Process
The incorporation process for the Cayman Islands typically takes approximately three to five working days as long as the required documents are provided. However, it is important to make sure the documents to be submitted adhere to the guidelines used in the procedure, and it can be helpful to get advice from the industry experts at Desfran who are well versed in the different processes.
3. English as the Official Language
English is the official and the most commonly spoken language in the Cayman Islands, followed by Spanish. This is an advantage that many investors look out for when considering where to set-up offshore business as it makes it convenient for businesses to carry out their operations smoothly without the added barrier formed by language.
4. Finance District
One of the main industries in the Cayman Islands is finance, having 100,000 registered companies there which is actually more than their population itself. The Cayman Islands has been regarded as the world’s premier global financial hub through client-centric market leadership in the prominent financial sector and long relationships held with sophisticated clients. The jurisdiction has also been a recipient of several awards in the industry, including the Top Specialised Financial Centre for the eighth consecutive years in 2016 by the Banker Magazine. There are also about 324 banks and trust companies that are licensed in the Cayman Islands, out of which 47 of the 50 are the largest banks in the world.
This contributes to the stability of the economy in the Cayman Islands and also to the overall business-friendly environment that investors may want to consider having in the area where they want to set-up their offshore businesses.
5. Stable Economy and Political Scene
Apart from having a very successful financial industry, the archipelago also relies on tourism which takes about 70% of the industry. The tourism industry is targeted more towards the luxury side with their beautiful beaches, adventurous water activities, and duty-free shops being the main driver to enable such a successful industry, in addition to also creating many jobs for their own residents in the nation.
As the Cayman Islands is a British Territory, its legal system is based on the English Common Law, which is a highly effective and respected court system. Overall, the Cayman Islands enjoy a relatively stable political climate with a political system governed by democratically elected and official members of the government.
A country’s economic stability and political temperament are bound to affect an investor’s decision to consider the place of choice for their offshore activities. With the stability in both the economy and the political scene brought about by the Cayman Islands, it is definitely worth considering for your potential investment.
Procedure for Registration
The offshore company requirements for incorporation would be:
- Directors and Officers: at least one director and one shareholder, can be of any nationality.
- Memorandum of Association: This includes information of the
- Registered office
- Objectives of the company,
- The type of company
- Authorised capital and type of shares
- Names, addresses, and signature of the subscribers
- Number of shares taken by a subscriber
- Name and signature of witness and the date of execution.
- Articles of Association: These regulate the internal operations of the company, such as how meetings are called, powers of directors, and officers.
- CIMA Approval: For businesses that carry out activities that need this permit, e.g. banking.
It usually takes around 1 – 2 weeks to incorporate the business in the jurisdiction. After the incorporation, there is the procedure to open a corporate bank account and to finish any additional registrations pending. After this, the company should be finally successfully incorporated.
While it is a popular tourist destination for those who are looking to indulge in a luxurious vacation, the Cayman Islands is also a thriving economy with opportunities for your company should you choose to invest in an offshore company set-up here. However, there are restrictions and legislations that are crucial to take note of when coming to a decision as well as the best jurisdiction for your incorporation. As such, it is best to engage consultants who are industry experts to turn to for deeper insight that would definitely be a positive addition to the decision-making process.
At Desfran, our team of expert consultants is here to provide you with our professional expertise regarding offshore services. Led by one of the world’s leading management teams, our experts draw on their wealth of knowledge to offer comprehensive management advice. We are aware of the latest developments and trends in the financial markets and are equipped to guide you to expand your business.
Request for a consultation with Desfran today.