The Cayman Islands is one of the largest and most popular financial centers. It provides a wide range of products and services that can be used to develop almost every conceivable tax and asset protection strategy.
The Caymans are located in the western Caribbean, convenient to the business centers in the U.S. More than 500 international banks have offices in the Caymans, including nearly every one of the top fifty in the world. More than 20,000 companies are registered in the country.
This activity and prosperity is due to four main factors:
- There are no income taxes, capital gains taxes, profits tax, or estate taxes.
- Bank secrecy laws are among the strictest in the world with criminal penalties for unauthorized disclosure.
- The law allows companies to be formed with a minimum of paperwork. Shares can be held anonymously in bearer form or by nominees.
- The law regarding the formation of trusts is highly developed and allows an excellent level of flexibility, asset protection, and privacy.
The Cayman Islands is what is known as a “booking center.” That means that business transactions are routed through the Cayman Islands to take advantage of the favorable tax laws. An Italian shoe company, ultimately selling to a U.S. department store, might sell first to a Cayman subsidiary. That company then sells to the U.S. company. The effect is to “book” the sale in the Caymans-with a zero tax rate- rather than in Italy with its high corporate tax.
Wealthy individuals immigrating to the United States, generally stop off in a tax haven such as the Cayman Islands. U.S. residents and citizens pay income tax on their worldwide income and estate tax on all property, wherever located. Before settling in America and becoming subject to its tax laws, an individual will strip himself of his ownership rights. This is accomplished with corporations or trusts which allow the advantages of control and enjoyment of the assets without the disadvantages of high income and estate taxes.