The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while business that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.
As a major offshore jurisdiction with tens of thousands of offshore enterprises already installed, including many investment funds and banks, it is only a matter of time before Cayman becomes a centre of e-commerce activity. The island's geographical location, its good telecommunications links and its sophisticated business infrastructure add to the inevitability of an e-future for the Cayman Islands.
By locating websites in Cayman to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.
In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.
For information about the impact of e-commerce on a number of the main offshore activities which take place on Cayman, click on a link below to go to our specialist E-commerce site Offshore-e-com.com
To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.