Why Do Business in the Cayman Islands

The Cayman Islands had a reputation for being a place where the wealthy can hide their money to avoid paying taxes. The Islands refute this suggestion and would prefer countries to look upon them as an international finance center for business. 

Indeed, the Cayman Islands are keen to encourage foreign investment and do this through their policies. The territory has a busy tourist industry, and its own stock exchange, and a plethora of successful financial services firms. With so many attractive systems, it is unsurprising many companies wish to do business there. 

Advantages of Doing Business in The Cayman Islands

The Cayman Islands Monetary Authority registers approximately 11,000 funds in the territory. The Cayman's enjoy a leading reputation as a financial center of excellence, with both domiciled businesses and overseas investors reaping the rewards of their world-class financial set-up. Those investing from abroad can find a range of professional director services to help them comply with the local regulations. 

While the Cayman Islands is a self-governing British overseas colony, its laws are a mix of common law and locally enacted statutes. Although the Islands do not adhere strictly to English law, that legal system is generally considered persuasive. When considering the intricacies of setting up or investing there, it is prudent to consult a lawyer based in the Cayman Islands. 

The Cayman Islands make setting up a business a relatively quick process. In around three-five business days, an owner can have their company registered. The fees are low, as are minimum capital stipulations. However, to ensure compliance with all local regulations, it can be helpful to have legal advisors on hand. 

Of course, there are also significant tax advantages to doing business in the Islands. While in some ways, the Islands treat domestic and foreign companies differently; this does not apply when it comes to taxation.  

Companies do not pay any corporation or capital gains tax and are also exempt when it comes to payroll tax. However, foreign companies do need to be aware that they may need to file tax returns in their own country.  

Potential Risks

As the laws may be different than they are in other countries, professional legal advice will be required to navigate safely through the various regulations. Additionally, rules are strict and are likely to become more robust as the territory seeks to show foreign countries that they are performing in line with financial regulations. Currently, the Cayman Islands use Anti-Money Laundering and Know Your Client policies for funds. The myriad of rules could be challenging to keep on top of, and so professional advice is essential to ensure compliance. 

Funds and investors must also keep in line with the territory's Data Protection Law. Although not precisely the same, it has similarities to the strict GDPR system used in the European Union. 

The Cayman Islands is an excellent location to do business. Their financial sector is world-renowned, and companies can enjoy significant benefits such as tax breaks. However, the complex system of laws and regulations that allow the system to be so successful may mean it isn't straightforward for a business to make the transition smoothly. 

As with all business ventures, it is essential to conduct the proper due diligence and take advice from professionals who are experts in their field.