The Cayman Islands consists of Grand Cayman, Cayman Brac and Little Cayman located just 480 miles south of Miami, Florida. 

The two "Sister Islands" of Cayman Brac and Little Cayman are located about 85 miles (135 km) northeast of Grand Cayman.

Fiscal Advantages

• The Cayman Islands does not levy direct (income) taxes
• Capital gains taxes and sales tax are not levied
• Withholding tax on dividends, interest and royalties are not levied
• Trusts are not subject to taxation because there are no direct taxes in Cayman Islands
• The registration of trusts is optional and is "rewarded" by a guarantee of 50-years tax exemption for the trust

Regulatory Advantages

• A generalised double licencing procedure is implemented in Cayman Islands which allows economic activity to be either carried out internationally alone or both domestically and abroad
• Nominee owners are allowed
• Bearer shares are permitted, unregistered bearer shares are available
• Shelf companies are available
• Accounting data is not required

Limitations

• Exempted companies, the category under which many of the financial institutions register, cannot operate domestically except in support of external business
• In both banking and insurance, an 'A' licence permits the licensee to carry on the full gamut of domestic and international business, while a 'B' licence restricts the business to international markets

There are four types of company that are usually registered under the Companies Law:

1. Ordinary Resident Company
2. Ordinary Non-Resident Company
3. Exempted Company
4. Exempted Limited Duration Company

Companies limited by shares are commonly used although the law permits companies limited by shares, companies limited by guarantee and unlimited companies. Shelf companies are available but are unusual. 

Ordinary companies are formed in a similar manner as in England. The Memorandum of Association should be filed to the registrar of companies, stating the name of the registered office; the objectives and the authorised share capital. The company may operate with one shareholder, who is required to hold at least one shareholder meeting every year. The company either charts its Articles of Association or implements the standard table. It should have at least one director. An annual report must be filed with the registrar of companies, listing the shareholders and officers. 

Activities of an Exempted Company shall be conducted outside the Islands although it may hold investments both within and outside the islands. 

Exempt Companies may obtain a guarantee from Government exempting it from any taxes for a period of 20-years. There is no need of shareholder meetings and they do not maintain a list of the annual shareholders. It need not include the suffix of 'Limited or Ltd.' in its name.

Incorporation & Registration will take about 48 hours. Any one or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association, and otherwise complying with this Law in respect of registration, form an incorporated company, with or without limited liability.

The law states that, the memorandum of association shall contain - 

• The name of the proposed company which in the case of an exempted company, may be preceded by or followed with a dual foreign name, with the addition, in the case of any company not being an exempted company or a company formed on the principle of having no limit placed on the liability of its members, in this Law referred to as an “unlimited company”, of the word “Limited” or the abbreviation “Ltd.” as the last word in such name; and
• The part of the Islands in which the registered office of the company is proposed to be situated

1. Memorandum of Association
2. Registration fee to the registrar
3. Sworn Statement which declares that the business of the proposed company will be undertaken outside Cayman Islands
4. Name & Address of the proposed first director
5. Company seal
6. Nameplate
7. Minute book
8. Statutory records

There are no taxes on income, capital gains or sales of real estate. Neither are there any death duties nor inheritance or gift taxes.

Capital Gains – No
Other Taxes – Income derived from stamp duties, custom duties, business licences and fees
Stamp Duties –

The Cayman Islands does not have a tax treaty with any country. Income received in the Cayman Islands from abroad may be subject to taxation in the country of origin.

The Cayman Islands is a leader in the global financial market, ranks number one in the Specialised Financial Centres.

Cayman Islands follows Common Law system based on English law. Two forms of Cayman Islands companies exist: The Exempted & the Non-Resident. The license fee of the Non-resident is lesser compared to that of the Exempted Company. Exempted Company names doesn’t need to end with the suffix ‘Limited’ and they may apply for a 20-year tax exemption certificate, further enhancing their tax-exempt status. Also, Chinese characters may be used in the Company name as long as its translated name is provided.

The Companies law was updated, revised and consolidated in 2004, 2007, 2010, 2011 and 2013. The most recent revision has initiated a number of augmentations and states that, - “Authority” means the Cayman Islands Monetary Authority established under section 3(1) of the Monetary Authority Law (2011 Revision), and includes a person acting under the Authority’s authorisation; “bearer share” means a share in the capital of any company incorporated in the Islands which -

• Is represented by a certificate that does not record the owner’s name and
• Is transferable by delivery of the certificate

To any management entity registered in Cayman as a company or partnership, or as a registered foreign company or partnership (a "Cayman Manager"), the Securities Investment Business Law ("SIBL") applies. Applications for a licence are made to the Cayman Islands Monetary Authority (“CIMA”) in the prescribed form and annual licence fees range from US$ 2,500 to US$ 10,000 depending on the category of licence required. These categories are:

• Broker Dealer
• Broker Member
• Securities Manager
• Securities Advisor
• Securities Arranger
• Market Maker

Anyone who conducts or purports to conduct securities investment business without the appropriate licence is guilty of a criminal offence. The penalties on conviction are severe: up to a year’s imprisonment and a fine of US$ 125,000 and, in the case of a continuing offence, a fine of US$ 12,500 for each day during which the offence continues. 

“Regulatory laws” means any one or more of the following:

• Banks and Trust Company Law (2013 Revision)
• Building Societies Law (2010 Revision)
• Companies Management Law (2003 Revision)
• Cooperative Societies Law (2001 Revision)
• Insurance Law (2013 Revision)
• Money Services Law (2010 Revision)
• Mutual Funds Law (2013 Revision)
• Securities Investment Business Law (2011 Revision)

The law in this area has been modified so as not to impose unnecessary registration burdens on foreign companies in certain cases whilst extending their eligibility in others. Specifically-

• A foreign company will not be subject to registration and attendant fees in Cayman merely because it has registrar and transfer agency services provided to it here
• Foreign ‘companies’ that are not technically bodies corporate, say, certain LLC’s may be registered as foreign companies and hence for instance will be eligible to act as general partners of Cayman limited partnerships

Restrictions on trading – Cannot trade within the Cayman Islands; own real estate in the Cayman Islands; Cannot undertake the business of banking, insurance business or mutual fund business unless licensed; Cannot solicit funds from the public.

LICENCING 

An annual fee is levied on all companies based on its share capital. In addition, licensed financial service companies pay annual licence fees, dependent on the type of business. All local businesses require a licence and annual payments are made dependent on the type and size of the business. These fees would not normally affect offshore companies and businesses. 

For exempt companies:

• For a share capital not exceeding US$50,000
• With a share capital greater than US$50,000 but not exceeding US$1 million
• With a share capital greater than US$1,000,000 but not exceeding US$2 million