LOWTAX.NET
CONTACT | RECRUITMENT | ABOUT | LEGAL | LINKS     
   NETWORK SITES:
   LOWTAX   
   TAX-NEWS   
  PBTG  
   

Jurisdiction Home Pages

Andorra
Anguilla
Aruba
Australia
Austria
Bahamas
Barbados
Belgium
Belize
Bermuda
Botswana
British Virgin Islands
Brunei
Canada
Cayman Islands
Cook Islands
Costa Rica
Cyprus
Denmark
Dubai
France
Germany
Gibraltar
Greece
Grenada
Guernsey
Hong Kong
Ireland
Isle of Man
Jersey
Labuan
Latvia
Liberia

Liechtenstein
Luxembourg
Madeira
Malaysia
Malta
Marshall Islands
Mauritius
Monaco
The Netherlands
The Netherlands Antilles
Nevis
New Zealand
Panama
Portugal
Russia
Seychelles
Singapore
South Africa
Spain
St. Kitts
St. Vincent and the Grenadines
Switzerland
Turks & Caicos Islands
USA
UK
Vanuatu

Newsletter

To receive monthly updates on new features in lowtax.net and tax-news.com just enter your e-mail address below:

Daily Tax Quote

New On The Network Today

This feed is published daily with selected new or updated content from across our network. For a list of network sites, many of which feature daily news, see below.

 
02/09 New Lowtax Editor Column, by Kitty Miv
01/09 International Privacy and Security, Investors Offshore special feature
31/08 Lowtax Belize, annual update
27/08 IRS To Drop UBS Lawsuit, Tax-News.com
26/08 New Lowtax Editor Column, by Kitty Miv
25/08 New PBTG Editor Column, Caroline, PBTG editor
24/08 Uruguay Stays On OECD Grey List, Tax-News.com
23/08 Don't Forget Doha, And I Don't Mean The Tennis, Jeremy Hetherington-Gore blog entry
20/08 Ireland Plans Social Security Overhaul, Tax-News.com
19/08 New Lowtax Editor Column, by Kitty Miv
18/08 New PBTG Editor Column, Caroline, PBTG editor
17/06 Lowtax Cayman Islands, annual update
16/08 Germany's Fiscal Court Seeks Property Tax Reform, Tax-News.com
13/08 Jurisdiction Special Focus: Antigua and Barbuda, Investors Offshore special feature
12/08 New Lowtax Editor Column, by Kitty Miv
11/08 New PBTG Editor Column, Caroline, PBTG editor
10/08 Brazil Cuts Import Tariffs, Tax-News.com
09/08 Ukraine Tax Code Published, Tax-News.com
06/08 France Plans Reform Of Property Tax Credit, Tax-News.com
04/08 New PBTG Editor Column, Caroline, PBTG editor
02/08 Islamic Finance - The New Mainstream Alternative, Investors Offshore special feature
28/07 New PBTG Editor Column, Caroline, PBTG editor
27/07 UK Launches Raft Of Tax Consultations, Tax-News.com
26/07 Fat Tax On The Menu , Jeremy Hetherington-Gore blog entry
23/07 Sarkozy Seeks 'Fiscal Convergence' With Germany, Tax-News.com
20/07 Singapore Base For Tuvalu OIFC, Tax-News.com
15/07 St Vincent & The Grenadines, Investors Offshore special feature
13/07 Tax- News.com Jersey Review 2010-2011
12/07 Goodbye To All That, Jeremy Hetherington-Gore blog entry
06/07 Hong Kong Full PBTG Guide, added to Personal Business Tax Guide
28/06 Lowtax Dubai, annual update
18/06 Singapore - Another Hong Kong?, Investors Offshore special feature
15/06 Swiss Parliament Approves UBS Agreement, Tax-News.com
08/06 Dubai Full PBTG Guide, added to Personal Business Tax Guide
04/06 Lowtax Panama, annual update
01/06 Lowtax Luxembourg, annual update
03/03 Personal Business Tax Guide, PBTG, has launched!
Providing essential tax news and information for globally mobile artists, contractors, entrepreneurs, professionals, small businesses, sportspersons and entertainers.
 

 
Lowtax Network Sites
Lowtax Network Portal: 'Low-tax' business and investment in the top 50 jurisdictions covered in exceptional detail.
Tax News: Global tax news, continuously updated through the day.
Investors Offshore: The independent offshore and alternative investment guide for expatriates and the globally aware investor. Sponsored by HSBC Bank International.
Law & Tax News: Daily news and background data on tax and legal developments for international business.
Offshore-e-com: A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library: One of the web's largest and most authoritative business and investment information sources.
US Tax Network: The resource for free online US taxation information, covering: corporate tax, individual tax, international tax, expatriates, sales and e-commerce tax, investment tax.
NEW! Personal Business Tax Guide: Providing essential tax news and information on business for contractors, entrepreneurs, professionals, small businesses, artists, sportspersons and entertainers.
 
>
LOWTAX OFFSHORE

CAYMAN ISLANDS : COUNTRY AND FOREIGN INVESTMENT REGIME


<

BACK TO CAYMAN ISLANDS INFORMATION: BUSINESS, TAXATION AND OFFSHORE

On this Page:

- CAYMAN ISLANDS GEOGRAPHY
- CAYMAN ISLANDS POPULATION LANGUAGE AND CULTURE
- CAYMAN ISLANDS GOVERNMENT
- CAYMAN ISLANDS ECONOMY AND CURRENCY
- CAYMAN ISLANDS ENTRY AND RESIDENCE
- CAYMAN ISLANDS BUSINESS ENVIRONMENT
- CAYMAN ISLANDS STOCK EXCHANGE
- CAYMAN ISLANDS IMPORT OF FOREIGN CAPITAL

- CAYMAN ISLANDS INVESTMENTS BY FOREIGNERS


Cayman Islands Geography

The Cayman Islands comprise three islands situated in the Western Caribbean, 150 miles south of Cuba. The islands, Grand Cayman, Cayman Brac and Little Cayman cover an area of 100 sq miles together. They consist of limestone outcroppings which are the tips of a submarine mountain range called the Cayman Ridge and extend off Cuba's southeast coast to the Misteriosa Bank near Belize. There are no rivers due to the porous limestone rock, although this accounts for the transparency of the surrounding Carribean Sea, often to over 120ft.

Grand Cayman is the largest of the three islands and measures 22 miles in length and 8 miles at its widest point. The islands are surrounded by coral reefs which create ideal conditions for divers and anglers. Cayman Brac is the most scenic island with a large bluff rising west to east along the island and rising to 140 feet at the eastern tip, ending in a sheer cliff. The island is only 12 miles long and slightly over a mile wide.

The climate is warm and humid although cooled by trade winds. Temperatures reach between 80-90F during the day in summer and 72-86F in winter. The average rainfall is 46 inches with May and October being the wettest months.

There are international airports on Grand Cayman and Cayman Brac, with in the region of nine major airlines serving US and European cities. A direct flight from Miami to Cayman (daily) takes just over one hour.

BACK TO TOP



Cayman Islands Population, Language and Culture

The population is estimated at 50,200 (2010). The majority live on Grand Cayman with about 1,200 people on Cayman Brac and only about 120 on Little Cayman. The capital is George Town, on Grand Cayman. Just over a third of the population are non-Caymanians, from 113 different countries. English is the official language with a brogue reflecting Welsh, Scottish and English origins. Jamaican patois is also common among the substantial part of the population that has immigrated from Jamaica.

The islands were discovered by Columbus in May 1503. He named them "Las Tortugas" after the abundance of sea turtles. On a voyage between 1585-86, Sir Francis Drake visited the islands and re-named them The Cayman Islands after the local word for crocodile.

In 1655 Cayman officially became part of the British Empire under the Treaty of Madrid and for the next 300 years the islands were administered as a dependency of Jamaica. King George III granted the Cayman Islands freedom from taxation after the courageous rescue of ten merchant vessels in the Royal fleet which ran aground in rough seas on 8 February, 1794.

The Caymanians are more of a maritime people than many Caribbean nations; having few native inland resources they have tended to live from the sea, and are good sailors. Perhaps this is why recreational scuba diving is said to have originated on Cayman; now it is a staple of the islands' pervasive tourist industry.

BACK TO TOP


Cayman Islands Government

When Jamaica became independent in 1962, the Cayman Islands chose to remain a British Crown Colony. Under the Constitution established in 1972 Cayman is a British Dependent Territory, with a Governor appointed by the Queen for a term of 4 years. There is an Executive Council consisting of three official members appointed by the Governor and five elected members selected from the 15 elected representatives of the Legislative Assembly. Elections are held every four years, most recently in 2009.

In the 2009 elections, the United Democratic Party, or UDP, led by McKeeva Bush, returned to power after a five-year absence, sweeping away the government of Kurt Tibbetts, winning nine out of the fifteen seats. While Tibbetts was in favour of a referendum on independence, in 2008 discussions began between the governments of the Cayman Islands and the UK on a new constitution for the jurisdiction. This constitution seeks to strengthen self governance in the Cayman Islands, while retaining strong links to the UK. Agreement has been reached on key issues, such as increasing cabinet representatives from five to seven and the Legislative Assembly from fifteen to eighteen, adding a Minister of Finance as a Cabinet-level position, with the Financial Secretary retained in an advisory role, and establishing a National Security Council (to handle policy matters surrounding national security issues) and a Judicial and Legal Services Commission to appoint the Attorney General and other key legal and judicial officials.

The Cayman Islands voted to adopt a revised constitution by a referendum held on May 20, 2009.

An amendment to the constitution in 1994 paved the way for a new ministerial form of government. The five elected members of the Council are now referred to as Ministers with portfolio responsibilities assigned by the Governor. A District Commissioner represents the Governor in the two sister islands. Government offices are located in George Town.

Attending a CARICOM meeting in July, 2005, Kurt Tibbetts, then Leader of Government Business of the Cayman Islands, said that his country will keep its current relationship with the Community. Cayman has associate membership of CARICOM. It did not sign the Treaty of Chaguaramas in 1973 and does not participate in voting although its representatives attend CARICOM meetings with observer status.

BACK TO TOP


Cayman Islands Economy and Currency

The prosperous Cayman Islands economy is dominated by tourism (70% of GDP) and financial services. The standard of living is one of the highest in the region; unemployment was 4% in 2008 and rose to 6% in 2009.

The upmarket Cayman tourist industry attracted 1.8m people in 2008, largely from the US. Cruise ship visitors make up a significant proportion of the total.

The Government has worked for 25 years to develop Cayman into a top financial jurisdiction, assisted by the fact that Cayman has never had any kind of taxation (stamp duty, import duties and registration fees being the only exceptions). Banking, insurance, trust management and mutual funds are the key sectors making up the financial services industry. More than 94,000 foreign companies are registered in Cayman. The financial sector is regulated by the independent Cayman Monetary Authority.

Cayman has tried hard to legislate away doubtful business based on drugs or money-laundering and has maintained a good reputation in this respect. It is a leading member of the CFATF (Caribbean Financial Action Task Force), and has signed Mutual Legal Assistance Treaties with the US and UK.

The Cayman Islands' currency is the Cayman dollar at a rate of US$1 = CI$0.81.

The economy experienced a period of difficulty in 2001, aggravated by the 9/11 terrorist attacks in the US, which cut heavily into tourist arrivals and affected international banking. The government responded with temporary cuts in some import tariffs and stamp duty. However, GDP remains one of the highest in the world at more than USD45,000 per head.

For 2009, the Economic Statistics Office reported a contraction of 6.6% of GDP. A further decline of 3.1% is expected in 2010 with a recovery to growth of 2.2% forecast for 2011.

BACK TO TOP



Cayman Islands Stock Exchange

The Cayman Islands Stock Exchange (CSX) is a private limited company owned by the government but operated as an independent entity under the Stock Exchange Law 1996. The CSX, which commenced operations in July 1997, was originally set up to provide a listing facility for the specialist products of the Cayman Islands, namely offshore mutual funds and specialist debt securities (known as SPVs = Special Purpose Vehicles). See Offshore Business Sectors.

By mid-2007, the CSX had more than 1,400 listings and a market capitalisation of more than $123 billion.

The CSX is regulated by the Cayman Islands Stock Exchange Authority and is not bound by European Union Listing Directives or US SEC regulations. Members must be local entities, either Listing Agents or Brokers, who have met the licensing requirements and have adequate staff. The CSX has approved a number of Listing Agents who are Cayman Islands based lawyers, accountants or other financial-based service providers. All issuers, other than issuers of international debt securities and securities which are subject of a secondary listing, must appoint a Listing Agent in connection with their application for listing. The Listing Agent will provide a formal link between the Issuer and the Exchange and will be responsible for advising the Issuer on all aspects of the listing process. To obtain a listing on the CSX the Issuer of a Security is required to pay a fee, both at the point of application and annually to maintain the listing.

In conjunction with Bloomberg, the CSX has developed a fully electronic listing and trading platform and a dedicated news wire service. The trading facility is "order driven", displaying a buy and sell price throughout the trading day. Investors trade with orders being displayed on-screen through the central system and the trades are executed automatically when buyers and sellers are matched.

In July 1999, the CSX was granted approved organization status by the London Stock Exchange. The CSX was able to demonstrate that its regime for listed securities meets all the detailed criteria for inclusion on the list of approved organizations. This was the first time an offshore stock exchange had been added to the list. The approved organization designation means that securities listed on the CSX are eligible for trading in the LSE's international equity market and for quotation on the SEAQ (Stock Exchange Automatic Quotation) international trading system.

More recently, the facility has been expanded to include global depositary receipts and derivative warrants. The CSX has developed rules for these specialist products, which are designed to raise capital from institutional investors. Issues of depositary receipts and derivative warrants may have to be listed to meet the investment requirements of such investors.

Unsponsored depositary receipts are created when a broker or bank believes there is sufficient investor interest in a foreign stock to make it worthwhile to set up a deposit programme. The broker or bank purchases the underlying shares, deposits them in the home country and sells depositary receipts. The foreign company itself is not directly involved. By introducing a listing facility for unsponsored depositary receipts, the CSX offers an opportunity for investors to participate in this market to an even greater extent.

Derivative warrants give the holder the right - but not the obligation - to buy or sell a share, or any other asset, at a fixed price on or before a specified date. The CSX listing rules deal with issues of warrants which relate to equity securities, debt securities, baskets of securities and indices. Derivative warrants meet specialised investment needs and are usually issued by a third party, often using a Cayman Islands special purpose vehicle.

In September, 2003, the CSX introduced rules that will allow the listing of shares in foreign firms on the CSX which previously was restricted only to the listing of domestic stock. "This move was a direct result of expressed requests from international companies for listing and trading on the CSX," said the CSX in its Autumn newsletter. "This change now permits a company incorporated outside the Cayman Islands (a “foreign company”) which is (i) a foreign company registered under Part IX of the Companies Law (2003 Revision) and (ii) an exempted or non-resident company to apply for listing and trading on the CSX."

With effect from 4 March 2004, the UK's Board of the Inland Revenue designated the Cayman Islands Stock Exchange as a ‘recognised stock exchange’ under section 841 of ICTA. As a result, interest paid on securities listed on the Cayman Islands Stock Exchange can now be paid without deduction of UK tax. Similarly, securities listed on the CSX are now regarded as 'qualifying investments', allowing them to be held directly in Personal Equity Plans (PEPs) and Individual Savings Accounts (ISAs).

As the Cayman Islands felt the ongoing effects of the financial and economic crisis, stock exchange listings declined by over 20% in the third quarter of 2009, with 1,316 listings, compared with Q3 2008, and finished 2009 with a total of 1,312 listings.

BACK TO TOP


Cayman Islands Entry and Residence

Citizens of the US, Canada and of Britain and its dependent territories do not require visas to enter Cayman; passport or birth certificate plus photo ID is sufficient, along with a return or ongoing travel ticket. Other nationals require a passport plus ticket. Visitors may remain for up to six months.

In January 2007, amendments revising the Cayman Islands Immigration Law (2006 Revision) came into force. The Law contains a number of changes to the Immigration Law, 2003, including work-permit term limits, permanent residency, a new category of 'key employees' and the ability of the Chief Immigration Officer to grant Caymanian Status to certain categories of applicants. The new law sought to clarify the work permit rules after years of frequent change to the rules, resulting in confusion for employers and backlogs in the processing of work permit applications.

Foreigners without Caymanian status seeking employment must apply for a work permit from the Immigration Department. Not all applications are successful. Work permits are generally valid for up to three years, or for up to five years in the case of domestics, teachers, doctors and ministers of religion. Five-year permits can also be granted to holders of certain positions that have been approved under a 'business staffing plan,' which the board now requires from firms employing 15 or more foreigners. Seven years is the maximum length of time a work permit holder can work continuously in the Cayman Islands, although, in certain in exceptional circumstances, a worker may be designated as an 'exempted employee' in a business staffing plan. Caymanian status is granted on a quota basis to citizens from the UK and British Dependent Territories, and certain other countries including the US, Eire, Australia and New Zealand.

The one-month temporary and six-month, short-term, work permits have been abolished. Instead, a temporary work permit may now be issued for a period not exceeding six months. All such applications will be made to, and decided by, the Chief Immigration Officer or his designate.

Since such grants are not extendable or renewable it will be important for applicants to state clearly the length of time that the temporary work permit will be required. In deciding whether an application should be granted or refused, the same criteria will be used as for the grant of a full work permit, except that employers will not be required to advertise or to demonstrate that they operate a training programme. Employers should also note that a temporary work permit cannot be converted into a one-year permit. The one-year permit must be submitted and granted prior to the expiry of the temporary permit if the employee wishes to continue to work.

In January 2010, Cayman Prime Minister McKeeva Bush announced that an amendment to the immigration law had been drafted to encourage foreign financial services companies to remain in the jurisdiction.

Bush said that the government was fast-tracking legislation to ease immigration laws imposed on those employed in the financial services sector. Under the proposed legislation, foreigners will be allowed to the island for extended periods, and the amount of time that they are required to reside outside of the territory after the expiry of their permit will be reduced.

In a statement welcoming the decision, Cayman Finance said that it "fully endorses the positive steps the government is taking to strengthen the Cayman economy and its financial services industry in these more challenging economic times."

On April 28, the Cayman Islands parliament passed the Immigration (Amendment) Bill 2010. This permits 25-year residence to wealthy individuals who invest in businesses that contribute to the prosperity of the islands, on certain conditions.

The new legislation introduces the opportunity for foreign individuals to apply for a Residential Certificate for Investment. While this will cost KYD20,000 (USD24,000), it allows the investor, their spouse and any dependents the right to live in the islands without the need for a work permit on certain conditions. Under the new law, investors must:

  • Have a net worth of at least KYD6m;
  • Invest at least KYD2.4m in licensed businesses with workforces comprising of at least 50% Caymanians, that contribute towards the prosperity of the territory;
  • Pass checks on business competence, show financial records of their businesses’ stability, and show they undertake a managerial role in their given area; and
  • Possess a clean criminal record and be of sound health with adequate health insurance.

Bush underscored that the Residential Certificate for Investment would not incorporate a Trade and Business License and, if necessary for operations, this would need to be applied for separately.

The island’s Immigration Law previously contained provisions to allow residence to wealthy investors but which were retracted as the islands received little interest.

Speaking to parliament, Bush said: “This government remains firmly of the view that important economic benefits can be derived from private individuals investing significant amounts in local businesses such as new developments, new industries, hotels for the tourism industry, and so on. The boost that such direct financial investment would give to our economy cannot be overlooked and incentives must be provided for them also as part of the overall package currently being promoted to encourage investment.”

BACK TO TOP


Cayman Islands Business Environment

In terms of business and communications infrastructure, the Cayman Islands offer the highest international standards. The business environment is particularly well-attuned to the finance sector as a result of Cayman's long-term policy of promoting itself as an international finance centre, accompanied by a well-developed regulatory structure: Cayman complies with all the requirements of the G-7 Financial Action Task Force. There is a good professional infrastructure, but it is not cheap.

Licensing of international 'offshore' business is dealt with under Offshore Legal and Tax Regimes and Offshore Business Sectors. Trade and Business Licences are administered through the Trade and Business Licensing Board of the Immigration Department as specified under the Trade and Business Licensing Law (2003 Revision), which requires that persons (individuals or companies) engaged in local business must have licenses. These licenses are issued only to individuals with Caymanian status or to companies beneficially owned or controlled by them. Foreign-owned or controlled companies doing business in the Cayman Islands must obtain a licence under the Local Companies (Control) Law (1999 Revision). A company is considered foreign owned if less than 60% of the equity is owned by Caymanians or if less than 60% of the board of directors is Caymanian.

BACK TO TOP


Cayman Islands Import of Foreign Capital

There are no capital or exchange controls in Cayman. Offshore banking transactions are relatively free from control, subject to precautions against money-laundering. Cayman applies the principles of the Basle Committee on Banking Supervision and complies with the requirements of the G-7 Financial Action Task Force. Large, undocumented cash transactions will be queried. However, confidentiality standards are tight; see Offshore Business Sectors Banking.

Capital, interest and profits may be repatriated at will; there are no withholding taxes in Cayman.

BACK TO TOP


Cayman Islands Investment by Foreigners

Offshore activities are encouraged by the Cayman Government; however there are no incentives directed towards foreign investment on the islands themselves, other than exemption from import duty for building materials intended for the construction of new hotels. As regards investment, Caymanians and foreigners are treated equally; there are in any case no taxes impinging on the investment process.

BACK TO TOP

<

BACK TO CAYMAN ISLANDS INFORMATION: BUSINESS, TAXATION AND OFFSHORE

THE LOWTAX LIBRARY

One of the web's largest and most authoritative business and investment information sources. Alongside topical, daily news on worldwide tax developments, you can receive weekly newswires or access up-to-date intelligence reports on a range of legal, tax and investment subjects.

FREE TRIAL NEWS SUBSCRIPTION

Our 16 constantly updated intelligence reports cover every important aspect of 'offshore' and international tax-planning in depth, including banking secrecy, the EU's savings tax directive, offshore funds, e-commerce, offshore gaming and transfer pricing. Reports are available for immediate downloading or as subscription services with news pages.

Advertising & Marketing

With over 50,000 qualified readers every month our web-sites offer a number of cost effective, targeted advertising, sponsorship and marketing opportunities:

Display advertising - from 'skyscrapers' to 'buttons'
Content/article submission and sponsorship
Opt-in email marketing
On-line Services Directory listings

Click here to learn more or contact Peter Wiggins on +44 (0)1424 813852 or email him at peter@lowtax.net

News & Content Solutions

Could your corporate web-site or newsletter benefit from incorporating regularly updated news and content tailored to serve your clients' interests? We can provide a variety of maintenance-free news and content solutions that can be seamlessly integrated and dynamically delivered:

Customised, personalised 'own-brand' news services
Newsletter content and management
News Headlines Tickers

Click here to learn more or contact Peter Wiggins on +44 (0)1424 813852 or email him at peter@lowtax.net

IMPORTANT NOTICE: THE LOWTAX NETWORK has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. All materials on this site copyright THE LOWTAX NETWORK 1999 to 2010.


All content on this site has been provided by BSIRN.