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Cayman Islands: Offshore Business Sectors

Introduction

Cayman is well-developed as an international financial centre. For 25 years the government has welcomed offshore business, and has created a world-standard regulatory structure to avoid money-laundering and other criminal activity. The Cayman Islands has the world's largest offshore banking sector, and is second only to Bermuda as a captive insurance centre. Mutual funds have been a more recent success story, assisted by the establishment of a stock exchange. Trust management has always been a significant activity. The islands also offer a shipping registry. During 2003 and 2004, China's explosive entry into world markets saw the Cayman Islands emerge as one of the primary routes for financial flows into and out of the Chinese mainland.

During 2003, the Cayman government battled to avoid inclusion in the scope of the EU's Savings Tax Directive, but in the end was forced to give in by the UK Treasury, and applied the information exchange model under the Directive from July 1, 2005. This means that information about interest on savings paid to citizens of European member states is being forwarded to the tax authorities of the member state in question. The Cayman Islands authorities have put a brave face on this development, which they tried hard to avoid.

Most sectors of the Cayman Islands financial services industry had a good year in 2004 despite hurricane Ivan. CIMA Chairman Mr. Timothy Ridley observed that: "We are very encouraged to see the impressive growth of the banking and insurance sectors of international business in 2004, despite the unforeseen burdens imposed by hurricane Ivan. Our service providers and their client base remain committed to the jurisdiction as evidenced by the strong licensing and registration activity in the final quarter."

CIMA's report for 2004/2005 showed continuing growth in the jurisdiction's offshore business sectors, with rapid growth of securitization business being one of the most marked features.

In March 2010, the Cayman Islands Economics and Statistics Office released a report showing deterioration in the island’s economy in all but the banking sector in the third quarter of 2009 as a result of the ongoing global financial and economic crisis.

However bank sector assets continued to grow, albeit at a lower level than earlier in the year, at a rate of 9.5% on Q3 2008, as both net domestic and net foreign assets continued to expand.

The 2012 saw a slight decline in new company registrations. New company registrations for the year were 8,972 compared to 9,064 in 2011.

Mutual fund registrations fell during 2012 compared to a year earlier to 8,950 new registrations, compared to 9,258 in 2011.

 

 

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