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The Cayman Islands

The Cayman Islands is a group of three islands located in the Caribbean Sea - Grand Cayman, Cayman Brac, and Little Cayman. The territory was sighted by Christopher Columbus in 1503.  The capital, George Town, is situated on the largest island, Grand Cayman. It is the main sea port and administrative center of the country. The Cayman Islands split from Jamaica in 1962. Now it is a separate British Overseas Territory, a constitutional monarchy, with Queen Elizabeth II as a head of the State, exercised on her behalf by the Governor. The legal system of the Cayman Islands has been developed from the British model which consists today of common law and local legislation.

  • Official language — English.
  • Currency — Cayman Islands dollar (KYD), which is pegged to the US dollar at a fixed rate of 1 KYD = 1.25 USD.
  • Main sources of the Cayman Islands income — tourism services, rearing of tortoises, shark business, financial services sector, and offshore companies. 
  • Main act of legislation for registration of an international company in the Cayman Islands – The Cayman Islands Companies Law of 1960.

The territory is a popular offshore financial center in the Caribbean. The Cayman Islands is a country with strict rules of offshore business confidentiality. Disclosing information is a crime, applying for information is prohibited.

As a practical matter for tax purposes:

Exempt Company

The Cayman Islands historically have been popular as a tax-exempt destination. Exempt company can be registered if it is not going to run any onshore business. Such companies pay only fixed annual state fee. There is no need to show the real beneficiary name and to give any accounts. Once a year a company must convoke a meeting of directors on the territory of the Cayman Islands.

Company is allowed:

  • to make changes in its Memorandum & Articles of Association;
  • to nominate its authorized capital in any currency.

Limitation of offshore company activities:

  • to have property in the Cayman Islands;
  • to borrow money from the public;
  • to run banking, insurance or mutual finance services without getting special licenses.

It must be said that the amount of annual maintenance of a company registered in the Cayman Islands is higher than the amount of annual maintenance of companies registered in the BVI or Belize. That is why a single use of company registered in the Cayman Islands is not of Russian business interest.


American investors register companies in the Cayman Islands in order to make investments in European shares. Funds are also in particular interest of Russian business. There are different types of funds. You can register a fund shared by subsidiaries registered in countries with low taxation (Holland, Denmark, Cyprus, Luxembourg, etc.). The use of double taxation agreements gives a possibility to reduce tax payments to zero. Fund structures are usually composed on the basis of tax exempted companies (offshore companies with non-resident status). Mutual investment fund usually bases on one or two companies of preferable types. Trust funds are used for investment in securities of South America, Mexico, Venezuela, Argentina, China, India and other countries. Trust funds use securities both with fixed and floating rates.           


Registration of a bank in the Cayman Islands is regulated by Banks & Trust Companies Law, 1989. The country is one of the leading offshore banking centers, more than 500 banks are situated on the territory and tens of the largest international banks have their branches and representative offices there. It is considered that the Cayman Islands are capable to make financial transactions with a very high level of reliability.

The categories of Bank licenses available under the Law:

“A” Unrestricted Bank License. Banks can provide service to domestic and international markets, carry out bank business within the Islands without any restrictions.  This license is reserved to major international banking institutions.

“B Unrestricted” License. The banks exercise offshore business without restriction but, in very limited and specified circumstances are not permitted to carry on business with any person in the Cayman Islands except other licensed and exempted or ordinary non-resident companies which cannot carry on business in the islands. These licenses account for the majority of those issued today.

“B Restricted” License. The banks may not receive or solicit funds by way of trade or business from persons other that those listed in an undertaking accompanying the application for the license. This license is restricted to named clients of the holder of the license, who are located offshore.  

Advantages of the Cayman Islands comparing with other offshore countries:

  • company is exempted from any kind of taxation and must pay only fixed annual state fee. This rule also applies to dividends, interests, increase of capital, and any capital received as a gift or legacy;
  • the Cayman Islands is a country with political and economic stability, with a high living standard;
  • no state currency control or money transfer limitation;
  • no signed agreements on avoidance of double taxation with other countries;
  • Vessel Register allows to register a boat of any class, from a small yacht to a freight tanker;
  • possibility to register a fund of preferable type advantageous for investor.