Cayman Islands Offshore Company

The Cayman Islands Government has constructed a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation in Cayman other than stamp duty and import duties. There are about 80,000 companies registered in Cayman, along with about 280 banks and nearly 800 insurance companies. See Law of Offshore for a detailed treatment of the legal regimes for Banking, Insurance, Trust Management and Mutual Funds. In this section offshore corporate forms are summarised, along with details of the fees payable by the various types of financial institution.

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In June 2000, the Cayman Islands was identified by the FATF as non-cooperative in the fight against global money laundering. The result of this is that the Cayman Islands was one of fifteen tax jurisdictions placed on a blacklist. Each offending tax haven had a year in which to correct its tax regulations and legislation. The FATF released its next annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative. Only four were removed from the list, including the Cayman Islands (the other three being the Bahamas, Liechtenstein and Panama). The Cayman Islands was praised by the FATF for its substantial efforts to conform to forty recommendations set out by the FATF in a code of good practice governing money laundering.

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 began applying 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.

Cayman Islands Forms of Offshore Operation

Offshore entities may take the following forms (click on a form for a description of the legal regime under which it is constituted):

  • Ordinary Non-Resident Company
  • Foreign Company
  • Limited Partnership
  • Exempted Company
  • Limited Duration Exempted Company
  • Exempted Limited Partnership
  • Trust or Exempted Trust

Banks, insurance companies, mutual funds, trust management companies and other financial institutions use an appropriate corporate form from the above list; in addition they are subject to registration or licensing as described in Offshore Business Sectors

Cayman Islands Fees Payable by Financial Institutions

Banks and Trust Companies (ie companies providing trust services) are licensed under the Banks and Trust Companies Law 1995 as amended and pay annual fees as follows:

  • Class A License (unrestricted domestic and offshore banking): from CI$400,000
  • Class B License (offshore banking; and trust companies): from CI$57,000
  • Class B Restricted Banking License (business dealings restricted to a list of specified persons): from CI$37,000
  • Trust Company License: from CI$57,000
  • Restricted Trust Company License: from CI$6,000

Insurance companies are licensed under the Insurance Law 1979 as amended and pay annual fees as follows:

  • Class A License (Domestic insurance business): CI$30,000
  • Class B License (Offshore insurance and reinsurance): CI$7,500
  • Class B Restricted License (Captives): CI$7,500

Mutual funds and their administrators are licensed under the Mutual Fund Law 1996 and pay annual fees as follows:

  • A licensed mutual fund administrator pays CI$20,000 for up to 50 administered funds and CI$25,000 thereafter;
  • A restricted mutual fund administrator pays CI$7,000;
  • Mutual funds pay CI$2,500.

The fees for listing on the Cayman Islands Stock Exchange are as follows:

  • On application for listing and annually thereafter: CI$1,640
  • Umbrella funds with more than 8 sub-funds: CI$8,200 (there is a sliding scale for umbrella funds with fewer than 8 sub-funds).
  • Secondary listings pay a fee on application and annually thereafter: CI$820

NB: Fees charged by listing agents are a separate matter; the above fees are simply set annual dues. The charges of a listing agent are likely to be in the CI$5,000 neighbourhood.

Cayman Islands Employment and Residence

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 exemptional 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.

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