DOING BUSINESS IN CAYMAN ISLANDS IN 2020
Since 2003, Healy Consultants Group PLC has efficiently and effectively assisted Clients with Cayman Islands i) business registration ii) business licensing iii) corporate bank account opening and iv) residence permits. We can establish either an exempted company or an ordinary non-resident company for our Clients’ businesses.
| Compare different Cayman Islands entities | Legally tax exempt LLC | Bitcoin company | Excluded person company | Foundation company | Hedge Fund |
|---|---|---|---|---|---|
| Also known as | Exempt Company | Cryptocurrency company | Excluded company | Foundation company | Investment fund |
| Best use of company? | Trading with global Clients | Crypto Trading / FinTech | Investment / Trading | Wealth management | Financial services |
| How long to supply company registration / tax numbers? | 2 weeks | 2 weeks | 2 weeks | 3 weeks | 3 weeks |
| How soon can you hire staff? | 2 weeks | 2 weeks | 2 weeks | 3 weeks | 3 weeks |
| How long to secure regulatory license? | Not required | Not required | 3 months | Not required | 6 months |
| How soon can you invoice Clients/sign sales contracts? | 2 weeks | 2 weeks | 4 months | 3 weeks | 6 months |
| How long to supply corporate bank account numbers? | 2 months | 2 months | 5 months | 2 months | 8 months |
| Corporate tax rate on annual net profits? | 0% | 0% | 0% | 0% | 0% |
| Limited liability entity? | Yes | Yes | Yes | Yes | Yes |
| Government grants available? | Yes | Yes | Yes | No | Yes |
| Government approval required for foreign directors? | No | No | Yes | No | Yes |
| Resident director/partner/manager/ legal representative required? | No | No | No | No | Yes |
| Registered agent required? | Yes | Yes | Yes | Yes | Yes |
| Minimum paid up share capital? | US$1 | US$1 | US$1 | US$1 | US$ 100,000 |
| Can bid for foreign Governments contracts? | Yes | Yes | Yes | Yes | Yes |
| Corporate bank account location? | Scotiabank | Butterfield Bank | Cayman National Bank | Deutsche Bank | RBC |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes |
| VAT payable on sales to local customers? | No | No | No | No | No |
| Average total business set up engagement costs? | US$16,162 | US$17,812 | US$ 31,472 | US$15,082 | US$48,120 |
| Average total engagement period? | 2 months | 2 months | 5 months | 2 months | 8 months |
Cayman Islands business setup summary
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Advantages of Cayman Islands company registration
- If properly structured, Cayman Islands company can legally house international profits while minimising international taxation;
- A Cayman Islands company is a legal corporate structure with no annual requirement to audit or report accounts;
- Only one shareholder and director are required to complete Cayman Islands company formation. The shareholder and director can be the same person, can be a corporate body, and can be 100% foreign owned;
- The complete absence of direct taxation can be backed by a 20-year government guarantee against the introduction of taxes. To get this guarantee, our Clients must apply for a Tax Exemption Certificate. This means no corporate taxes, no capital gains taxes, no payroll taxes, no property taxes, no withholding taxes. However, Tax Exemption Certificates are available only to exempted companies;
- There are no minimum capital requirements. Government registration fees increase with the amount of issued share capital;
- An exempted Cayman Islands company need not keep a register of members open for public inspection;
- After exempted company formation, the entity can be run from anywhere in the world with no need to hold AGMs. Ordinary non-resident companies do not have the same flexibility;
- The Cayman Islands are a world-renowned centre for financial services, with many investment funds domiciled in the Islands thanks to the efficiency of the local tax and regulatory systems;
- The local currency is easily convertible, as its value is pegged to the US dollar. 1 US dollar = 0.82 Cayman Islands dollars. Consequently, the majority of business done through the Caymans is carried out in USD;
- Because the Cayman Islands are a British Overseas Territory, local laws are based on English law. This makes doing business through the Caymans easy for Clients with expertise in Commonwealth legal systems;
- It is easy to open global corporate bank accounts to support company incorporation. Healy Consultants works with internationally recognised banks such as HSBC, Standard Chartered, and Citibank to provide corporate bank account services;
- After the Cayman Islands government passed an amended bill, foreign individuals who have a net worth of US$7.3 million (KYD6 million) can apply for a Residential Certificate for Investment. This certificate gives the individual the right to reside in the Cayman Islands for up to 25 years, but the individual is expected to abide by a number of laws, including:
- Investing US$2.9 million (KYD2.4 million) in businesses whose workforce consists of at least 50% local Caymanians;
- Passing regular tests to confirm the financial stability of their businesses and their managerial role in their business;
The Residential Certificate for Investment costs US$24,000 (KYD20,000) and also allows the individual’s spouse and dependents to reside on the islands;
- Cayman Islands has a supportive and favourable business climate for its investors due to its i) stable macro-economic and political environment contributing to low rates of inflation, ii) world-class infrastructural facilities and iii) excellent communications system along with a secure fibre optic network.
Disadvantages of Cayman Islands company registration
- The Cayman Islands are internationally perceived as offshore tax haven. In February 2020, the Cayman Islands were added to the European Union’s (EU) tax havens blacklist for its failure to implement ‘economic substance’ requirements on local companies in order to crack down on tax evasion;
- An exempt company cannot do business with Clients in the Cayman Islands. However, exempted companies are eligible to carry out international business through a local operation;
- Foreigners may only purchase Cayman property through an ordinary non-resident company and not through an exempted company. This increases the administration associated with owning real estate in the Caymans;
- Because the Cayman Islands has no taxes of its own, it has not concluded many double taxation avoidance treaties. Consequently, Cayman Islands companies are not always the most tax-efficient holding companies;
- Following pressure from the United Kingdom after receiving funding for its economic contraction and capital deficit, the Cayman Islands are in the process of increasing fees and taxes. Annual company fees (for both resident and foreign companies), general registry fees, import duties, and work permit fees, among others, are expected to rise;
- In June 2000, the Cayman Islands were deemed a ‘cooperative jurisdiction’ on tax matters by the Organisation for Economic Cooperation and Development (OECD) in the exchange of information. Cayman Islands have signed a total of 12 Tax Information Exchange Agreements (TIEAs) with countries including Denmark, Faroe Islands, Finland, France, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Sweden, and the United States;
- Banks and Trust companies pay annual fees when registered under the Banks and Trust Companies Law 1995;
- It is important that our Clients are aware of their personal and corporate tax obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations;
- Cayman Islands has a population that is as low as 62,585 people. Additionally, the economy is heavily dependent on tourism and financial sector services. Therefore, it is an extremely challenging task for businesses that belong to other sectors to i) have a wide consumers base and ii) hire skilled labour force within Cayman Islands;
- In November 2018, The Cayman Islands implemented updated rules regarding FATCA and CRS for companies trading and managing securities. Such companies will need to register with the Tax Information Authority (TIA) in Cayman re their FATCA or CRS obligations;
- The Cayman Islands Monetary Authority (CIMA) has also issued new rules that each company must adopt AML and KYC polices. View examples of such policies here.
