E-Mail us | Site Map | Privacy | Contact
   Order Form   |   About Us   |   Contact Info   |   Latest Products   
     
  We are proud to be the oldest and continuous provider and publisher of anonymity, asset protection, offshore, privacy, PT, tax avoidance, tax haven and wealth protection products and services in the world - bar none!


 
  How To Pay Us   |   Introduction   |  Our Mission   |   PT Philosophy   |   Wealth Protection   |   Testimonials  
 
SUBSCRIBE
About us
Anonymity
Anonymous Banking
Anonymous GSM Mobile Phone
Asset Production
Book Store
Citizenship and Resiency Programs
Consultancy Services
Contact Us
Credit Cards
Forfeiture Sales Of Giant U.S. Corp.
How To Pay Offshore-Manual
Ids
Immigration
International Business Company
International Driving Permit
Maildrops
Merchant Accounts
Offshore Companies
Order Forms
Passports & Citizenships
Payment Options
Photo Id Cards
Press Pass
Second Passports & Citizenships
Secure Order Form
Special Offers
Swiss Bank Accounts
Tip Of The Month
Titles: Noble & Royal
Trusts
 

Cayman Islands

 

The Cayman Islands Government Information Services recently advertised that the total number of banks registered in the Caymans topped out at 533, with approximately US$415 billion in deposits. Forty-six of the largest 50 banks in the world are represented in the Caymans, as well as all of the “Big Six” accounting firms. 

To give you a comparison of how really gigantic the Cayman Banks as a group are, the banking deposits in all of California’s Commercial banks stand at right around $220 billion. The banking deposits in the Bahamas reached @ $300 billion. According to the Offshore Financial Review (London), the $415 billion on deposit in the Cayman banks towers over the combines assets of all European offshore centers. 

In addition, Cayman banks are said to have more dollars on deposits in the Caymans have dropped slightly since the end of 1991 when deposits reached $430 billion. Yet the total number of banks registered in Cayman has actually grown. 

The Cayman Islands are now the fifth largest financial center in the world, trailing New York, Tokyo and London. 

Taxes 

There are no personal income taxes, no corporate income taxes, no capital gains taxes, no withholding taxes, no estate, gift or inheritance taxes, no sales taxes, no employment taxes, no death duties, and no probate fees in the Cayman Islands. Guarantees against future taxes are available to exempted companies and trusts. Exempted companies can receive a guarantee from the government for a period not exceeding 30 years. Exempted trusts can receive a guarantee for 100 years. The Caymans have no tax treaties with any nation. 

Caymanians have historically had distaste for taxation, and this has provided a natural setting for the system of laws and regulations, dating back to the 1960’s, which have created and encouraged the growth of the Islands as an offshore financial center. Tax lawyers refer to the Caymans as a no-tax or zero tax haven. Taxes or all types simply do not exist in this country. 

Like the other no-tax havens of the Bahamas, Bermuda, Anguilla, Vanuatu and Nauru (in the South Pacific), the Caymans have traditionally enjoyed a complete absence of direct taxation. The only form of direct taxation the Cayman Islands ever had was a $10 a year tax on adult males, but that was abolished in 1985. 

People, History, Accessibility, Currency 

“The Cayman Islands… those that know us.., love us.”  So the song goes in the Cayman Island Tourist Bureau’s television ads that appear on TV’s across the America. Truer words were perhaps never spoken. The Cayman Islands are an English speaking British Crown colony especially suitable for U.S. businessmen and Canadian businessmen owing to their close proximity to the U.S. and North America. There are more than 500 bank and trust companies, and over 300 insurance companies registered in this world famous tax haven. The Caymans receive over 500,000 tourists every year, most of them from the U.S.A. 

The Cayman Islands are three small islands (Grand Cayman, Cayman Brac and Little Cayman) about 480 miles south of Miami, and just north of Jamaica in the Caribbean Sea. The population is now about 28,000, made up of about 20% Caucasian, 25% black and 55% mixed race. It is racially integrated, socially and otherwise, and color is not considered a real issue to these fun loving islanders. The capital and principal city is George Town, located on the largest of the three islands, i.e., Grand Cayman. 

You don’t have to travel for 24 hours or spend upwards of $1,500 to get to your tax haven in George Town, as you would if you had chosen Hong Kong, Vanuatu, Campione or Switzerland as an offshore base. The Caymans have daily flights from Miami year round, and weekly connections to 12 other cities in North America and Jamaica. There are several flights each week from Houston, Texas too. Travel time to Miami is just two hours, at a cost of about $200. You can catch a Concorde from Miami to London at Miami’s International Airport if you’re coming from Europe and you’re in a hurry! 

Columbus first sighted Little Cayman and Cayman Brac during his fourth and last rip to the West Indies in May, 1503. In 1655 Jamaica was captured from Spain by the British, and in 1670 was ceded along with the Caymans to the British Crown. The first Cayman settlers were buccaneers, shipwrecked sailors and debtors. 

Today, the Governor is appointed by the British government, and there is no likelihood of independence being predicted for the Caymans for many years yet. The Cayman dollar floats against the pound sterling, and is roughly equivalent to US$1.20. There are no exchange controls in Cayman limiting what currency you can use. 

Ordinary and Exempt Companies 

There are principally two types of companies you can register in the Caymans; the exempted and the ordinary company. Foreign investors almost always choose the exempted company because its register of shareholders is not open to public inspection, and it may be kept inside or outside the Cayman Islands. The register of shareholders for ordinary companies are open to public inspection. 

Exempted companies do not have to file annual returns with the Registrar, although an annual declaration must be filed. Typically, alternate directors or an assistant secretary are provided by the lawyer, trust company, bank or accountants that formed the company, so to meet this requirement, since the real beneficial owners and directors would not reside in the Cayman Islands. 

No annual meeting of shareholders I necessary for an exempted company, and certain sections of the Companies Law do not apply. 

Any proposed company, the objects of which are to be carried out mainly outside the Cayman Islands, may apply to be registered as an exempted company. A declaration signed by a director to the effect that the operation of the proposed exempted company will be conducted mainly outside the Islands must be submitted to the Registrar along with its memorandum and bylaws (a.k.a. the Articles of Association). 

Every exempted company  must maintain an office in the islands and the directors must hold at least one meeting in the Islands each calendar year, although it is common practice to appoint local alternate directors specifically for the purpose of fulfilling this requirement. 

Shares without nominal or par value may be issued, as may bearer shares, provided they are fully paid, but any invitation to the public in the Islands to subscribe for shares or debentures is prohibited.

  1. The company name must be approved by the Registrar of Companies.
  2. The company must have a registered office and agent in the Caymans.
  3. Bank reference letters and a minimum US$500 initial deposit to open bank account with Cayman bank.
  4. At least one director required.
  5. Company secretary required before company can commence business.
  6. Names of shareholders of non-resident and local companies must be disclosed. Bearer shares may be issued for exempted companies in which case no disclosure of shareholders is called for.
  7. Exempted companies must hold a directors meeting in Cayman once a year.
  8. No annual audits required.  

An exempted company may be granted a guarantee by the Governor in Executive Council against future taxation for up to 30 years. 

Costs to Incorporate 

Total start-up costs to form an exempted company range between $2,300 and $3,000. Annual maintenance costs and government fees thereafter run about $2,000. Price Waterhouse might charge US$900 per annum to provide you with a registered office. 

The costs of incorporation includes the government fee and is for a company formed with a standard memorandum and articles of association. In situations where nonstandard companies are required or advice is required regarding the structuring, fees will be higher. 

The maximum authorized capital for the minimum start-up government fee is US$900,000. For authorized capital in excess of US$900,000 the start-up fees can reach a maximum of US$2,300. The maximum annual government fee for an exempted company is US$1,700. 

Cayman companies can be used for a variety of purposes, including offshore captive insurance and reinsurance companies, bond issuing companies raising finance in the international markets, treasury and cash management companies with tax-free accumulation of funds possible. Other uses include investment holding and property management companies and invoicing and trading companies. 

Exempt Companies 

In addition to a 30-year guarantee against future taxes by the Governor in Council, there are other advantages to forming an exempted company. 

  1. The company name need not include the words “Limited” or “Ltd.”
  2. It is not required to maintain a register of shareholders, thus names (owners) are not a matter of public record.
  3. No annual meeting of shareholders is necessary.
  4. No annual return has to be filed with the Registrar, although an annual declaration must be made stating that the company continues to comply with the requirements of an exempt company.
  5. Shares without par value (i.e., no-par value) or nominal value may be issued, as can bearer shares. 

According to Price Waterhouse (Grand Cayman) 68 page information guide – Doing business in the Cayman Islands – the costs for registering an exempted company in the Caymans has remained fixed at US$1,025, but the annual fee the government now charges has fallen from US$700 to US$500. By comparison, the government start-up and annual renewal fees in the BVI is US$299m and in the Bahamas just US$100. 

Directors and Shareholders 

The day-to-day business of the company is carried on by the directors. Directors may be of any nationality and do not have to be Cayman residents. There are no restrictions as to how many directors a company must have. Directors are appointed by the casting of a majority vote by shareholders in a general meeting. Alternate or nominee directors can sub for the real directors. Use of nominee shareholders and directors is customary in the Caymans. Directors generally are responsible for the appointment of the President, the executive officers, the treasurer and the managing directors of a Cayman company. 

You can examine a copy of the Cayman Companies Law by writing the Registrar of Companies in George Town at: 

Registrar of Companies
Government Administration Building
George Town, Grand Cayman,
British West Indies
Telephone (809) 949-4844
Telex 4260 

A Register of Companies 

In your Cayman office it is required by Companies Law (25-(3) that a register of companies be kept in which the following particulars shall be annexed to the Memorandum of Association or Articles of Association (if any) in so far as they are not included therein:

  1. The name of the Company;
  2. The part of the islands in which the registered office is proposed to be situated;
  3. The amount of capital and the number of shares into which the company is divided and the fixed amount thereof;
  4. The names, addresses and occupations and subscribers to the Memorandum, and the number of shares taken by each subscriber (not required for Exempted Companies);
  5. The date of execution of the Memorandum of Association;
  6. The date of filing of the Memorandum;
  7. The number assigned to the company;
  8. In the case of a limited company, by guarantee or when no limit is placed on the liability of its members, the same is limited by guarantee or is unlimited.

 “From the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum of association, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum of association, capable forthwith of exercising all functions of an incorporated body, and have perpetual succession and a common seal with power to hold lands, but with such liability on the part of members to contribute to the assets of the company in the event of it being wound-up as in hereinafter provided in the Cayman Companies Law.” 

“Every copy of the Memorandum or Articles filed and registered in accordance with the above law, or any extract there from certified under the hand and seal of the Registrar of Companies as a true copy shall be received in evidence in any court of the Islands without further proof.” 

Copies of the Memorandum must be provided to Members 

It is the law in the Caymans that you provide a copy of the memorandum having the articles annexed thereto to every member, at his request, on payment of one dollar for each copy as may be fixed by the rule of the company (rules are provided in the articles or by-laws), and in the absence of any such rule, such copy shall be given gratuitously; and if any company makes default in forwarding a copy of the memorandum or articles (if any) to a member in pursuance of Section 28, the company so making default shall for each offense incur a penalty of two dollars

Company Name Restrictions 

In the Caymans (and in most other tax havens) a company cannot be registered in a name, which is identical with that of another company in existence and already registered. No company may use the words (Chamber of Commerce”, unless it is a company registered under license granted by the Governor. In addition, no company name may contain the words “Royal”, “Imperial”, or “Empire”, as that would be calculated to mean that the patronage of Her Majesty or a member of the Royal Family or Her Majesty’s government was being provided. You are also prevented from using the words “municipal” or “chartered” in your company name. 

Articles of Association (by-laws) 

The Articles of Association (referred to as “Articles”) contains the rules and regulations for your company. They are the equivalent to what U.S. lawyers call the by-laws. Every company should have a set of articles, but if you don’t want your own, you can adopt the set provided by the Cayman Government called Table A. You are permitted to modify Table A, or write up an entire set from Table A, and they will be acceptable by the Registrar. In the Caymans, if you don’t provide articles when you file your memorandum, the government will assume you to have adopted their own Table A. 

Books, Records and Annual Returns 

Cayman law requires a company keep proper records of account with respect to receipts and payments, purchases and sales, and assets and liabilities. Proper books have been described as necessary to give a fair view of the state of the company’s affairs, and to explain its transactions. An annual return is required by law, but it is not necessary that it be audited. 

Nominee Shareholders

The Caymans and other tax havens allow for the use of nominee shareholders when forming a company. Nominee shareholders help preserve your confidentiality. They are a tradition in places like the Caymans, the Bahamas, and Bermuda. The IRS will not recognize a nominee as the real owner of the shares, but as nominee shareholders make it doubly difficult for the IRS or any investigating agency to assemble information on a company or its owners, they are in widespread use anyway. Nominees help safeguard one of your “Constitutional Rights” – your right to privacy. Nominee shareholders should be used in combination with good tax planning and not exclusively as a means to evade disclosure to the home country tax authorities. 

Nominees usually sign a declaration of trust in favor of the real beneficial owners of the company. Because it is the names of the nominees (generally lawyers or trust agents) that are printed or typed on the Memorandum and recorded in the Registrar of Companies, thus becoming a matter of public record, the true owner’s identity is kept secret. Nominee shareholders cost about $500. Businessmen seeking further anonymity in their affairs can also issue bearer shares. 

Exempted and Ordinary Trusts 

Cayman trusts are governed by the trust Law (Revised), 1976. A trust can be created by a resident of any country, and the settlor does not have to be physically present in the Islands. While the trustee should be located in the Caymans, it is not necessary to keep trust assets there. A stamp tax of US$50 is payable on a trust deed, but there is no requirement for public recording or registration. 

No statutory restrictions exist in Cayman regarding accumulation of income, but the common law rule against perpetuities applies, except in the case of exempted trusts. The common law rule against perpetuities is that the duration may not exceed a period of 21 years after the death of the last named beneficiary living at the time the trust was created. 

Cayman trusts are governed by the Trust Law (Revised) of 1976. The trustee of an offshore trust should be resident in the tax haven, but it is not necessary that trust assets be kept in Cayman. Foreign trustees are usually trust companies, banks, attorneys, but any person or company can be a trustee. A foreign trust in Cayman or elsewhere should always have as many foreign trustees as U.S. trustees, otherwise the IRS will probably not recognize the trust as “foreign”

An ordinary trust can be formed in Cayman upon payment of a stamp tax of CI$40. There is no requirement for public recording or registration of an ordinary trust. An ordinary trust usually assigns a bank or trust company to act as trustees, and it is customary to use local entities for this function. Neither the settlor (grantor) or the beneficiaries have to be physically present within Cayman, and the trust’s assets may be kept outside the islands. 

Upon special application by the trustees, the Registrar of Trusts may register a trust as an exempted trust, where the beneficiaries do not include and are not likely to include any persons resident in the Caymans. A registration fee of US$500 is payable to the Cayman Registrar for an exempted trust. An exempted trust must pay an annual fee of US$120 in March of each year, and the trustees must file with the Registrar such accounts, minutes and information as the Registrar may require. 

Documents files with the Registrar are open to inspection by the trustees or any other person authorized by the trust and by the Registrar, but are not open to public inspection. 

A trustee of an exempted trust may apply to the Governor in Exempted trust may apply to the Governor in Executive Council for an undertaking that no future tax will apply to any property or income of the trust. 

An exempted trust may provide for perpetuity of up to 100 years, and during its subsistence the beneficiaries have no interest, vested or future; all rights of the beneficiaries are vested in the Registrar of Trusts, who is an official of the Cayman government. 

A foreign trust amply drafted can (1) invest in U.S. stocks; (2) receive U.S. bank interest from U.S. commercial banks and S&Ls within or without the U.S.A.; (3) accumulate its income free of Federal Income tax. Certain foreign “grantor” trusts can have U.S. beneficiaries who can receive “foreign source incomes” from the trust and not be taxable on such income distributions. 

Investment Holding Companies 

A Cayman company set-up, so it is not categorized as a Controlled Foreign Corporation (CFC), can trade U.S. stocks, options, commodity contracts, currencies, futures, Treasury and corporate bonds, free of all U.S. capital gains taxes. Exemptions are provided within the Internal Revenue Code. There are three exceptions:

  1. The foreigner is engaged in a U.S. trade or business inside the U.S.A. or has an office within the U.S.
  2. The gains are attributed to stock in a U.S.Real Property Holding Corporation orU.S.Real Property Interest as defined under IRC §897(c).
  3. Gains are ascribed to stocks that are not publicly traded on an established securities exchange.  
Eurodollar Bonds & Other Interest Bearing Instruments 

Eurodollar bonds are one of the safest offshore investments. More than 750 billion of Eurodollars are now outstanding. Eurodollars are now outstanding. Eurodollars are issued from either Delaware or the Netherlands Antilles by the international finance subsidiaries of giant multi-national corporations including Exxon, Mobil, RJR Nabisco, and Ford. Eurodollars are unconditionally guaranteed as to both principle and interest by the parent company. They are free from the U.S. withholding taxes. 

Eurodollar bonds are often convertible into shares of common stock of the U.S. parent. This is an added incentive as the stock can then be sold tax-fee. 

Banking in the Cayman Islands 

You can form a bank in the Cayman Islands instead of a “mere” holding company, but a license must be obtained from the Cayman government. Banks are licensed under the Bank & Trust Companies Regulation Law 1978. There are two main classes of Bank licenses, Class A and Class B. Class A license holders are granted the right to operate inside or outside the Caymans. Class A licenses cost CI$30,000, and this fee is payable every January thereafter. 

Class B licenses cost between CI$9,000 for an unrestricted, and CI$6,000 for a restricted license. Legal fees on formation of a bank vary from about CI$3,000 to CI$8,000. 

Licenses are granted for banking business, trust business, or banking and trust services. The Governor may revoke a license if in his opinion the licensee is carrying on its business in a manner detrimental to public interest or to the interest of its depositors, or is contravening the law. 

Banking & Financial Center Unrivaled 

As of January 1, 1987 bank and trust companies licensed in the Cayman Islands passed the 500 mark, representing over 50 countries, and including 60 with their own local operations. The benefits of doing business in the Islands are reflected in the total of over 18,000 companies registered in the Government registrar, including more than 350 offshore insurance companies. Forty-three of the world’s top 50 banks maintain subsidiaries or branches in Cayman. Many of the remaining 470 banks are said to be privately owned, established for a restricted clientele. 

Banks are closely regulated by the closely regulated by the Government’s Inspector of Banks, and audited by such well-known international accounting firms as Price Waterhouse, Thorne Riddell and Peat Marwick. In the past 20 years there have been just three bank failures, none of which were of inter-banking significance. Downtown George Town has a myriad of gleaming new bank building a testament of her opulent and booming economy. 

Cayman Banks 

The first eight banks below provide a full range of services, the others have staffed offices. 

Barclays Bank PLC
P.O. Box 68, Cardinall Avenue
Tel.: 97300. Telex: 4219 BARCLAY. Fax: 97179 

Bank of Nova Scotia
P.O. Box 689, Scotia bank Building
Tel.: 97666. Telex: 4330 SCOBANK. Fax; 97097 

Canadian Imperial Bank of Canada Bank & Trust Company (Cayman), Ltd.
P.O. Box 695, Edward Street
Tel.: 92366. Telex: 4222 CENBANK. Fax: 97904 

Cayman National Bank & Trust Company
P.O. Box 1097, West Wind Building
Tel.: 94655. Telex: 4313 CNBANK. Fax: 98203 

First Cayman Bank, Ltd.
P.O. Box 1113, West Bay Road
Tel.: 95266. Telex: 4347 CAYBANK

Royal Bank of Canada
P.O. Box 345, Cardinall Avenue
Tel.: 94600. Telex: 4244 ROYBANK. Fax: 97396 

Washington International Bank & Trust Co.
P.O. Box 609, Downtown
Tel.: 98144. Telex: 4214 WINBANK. Fax: 97761 

First Home Bank Ltd.
P.O. Box 914, First Home Tower
Tel.: 95774. Telex: 4265 FSTHOME. Fax: 97192 

AALL Trust & Banking Corporation, Ltd.
P.O. Box 1166, Aall Building
Tel.: 95588.  Telex: 4303 AALLCO. Fax: 98265 

Altijir Bank
P.O. Box 691, Sigma Building
Tel.: 95626. Telex: 4352 ALTAJIR 

Banco do Brasil, S.A.
P.O. Box 1360, Scotia bank Building
Tel.: 95907. Telex: 4354 BBCAYMN 

Banco do Estado de Sao Paulo, S.A
P.O. Box 1811, Scotia bank Building
Tel: 95002. Telex: 4296 BANESGC 

Banco Portuguese do Atlantico
P.O. Box 1040, Scotia bank Building
Tel.: 99322. Fax. 97743 

Bankers Trust (Cayman) International, Ltd.
P.O. Box 1967, Elizabethan Square
Tel.: 98322. Telex: 4434 BTCAY. Fax 97866 

Bank of America National Trust & Savings Association
P.O. Box 1078, Anchorage Center
Tel.: 94088. Telex: 4306 BNKAMER 

Bank of N.T. Butterfield & Son (Cayman), Ltd.
P.O. Box 705, Butterfield House
Tel.: 97055. Telex: 4263 BFIELD  

Bermuda Trust (Cayman), Ltd.
P.O. Box 1321, Scotia bank Building
Tel.: 94400. Telex: 4228 TARPON 

B.E.G. Bank Cayman Islands
P.O. Box 1786, Transnational House
Tel: 74133. Telex: 4453 BEGCI 

BFC Bank (Cayman) Ltd.
P.O. Box 454, Elizabethan Square
Tel.: 98748. 

Cayman Capital Trust Company
P.O. Box 1779, Transnational House
Tel.: 74888. Telex: 4450 CCTRUST 

CITIBANK N.A.
P.O. Box 70, Jack & Jill Building
Tel: 94281 

Givens Hall Bank & Trust Ltd.
P.O. Box 2097, Citco Building
Tel.: 98141 

Ansbacher Limited
P.O. Box 887, Ansbacher house
Tel.: 97653. Telex: 4305 ANSBAC 

IBJ Schroder Bank & Trust Co.
P.O. Box 1040, West Wind Building
Tel: 92849. Telex: 4226 BAERCAY 

Julius Baer Bank & Trust Company
P.O. Box 1100, Butterfield House
Tel.: 97121. Telex: 4226 BAERCAY 

Leumi Cayman Finance & Trust
P.O. Box 1818, Yankee Notion Corner
Tel: 95100. Telex: 4266 LEUMICF 

Middle East Bank International, Ltd.
P.O. Box 950, Jack & Jill Building
Tel: 96322. Telex: 4426 MEFIL 

Accounting Firms 

Arthur Young & Company
P.O. Box 460, Grand Cayman, B.W.I.
Tel.: 92151. Telex: 4231 AYCI 

Coopers & Lybrand
P.O. Box 219, Grand Cayman, B.W.I.
Tel.: 97000. Telex: 4220 COLYBRA 

Deloitte Haskins & Sells
P.O. Box 1787, Grand Cayman, B.W.I.
Tel.: 97500. Telex: 4333 RHBCO 

Price Waterhouse
P.O. Box 258, Grand Cayman, B.W.I.
Tel: 97944. Telex: 4329 PWCOCO 

Rawlinson, Hunter, Butterfield
P.O. Box 1787, Grand Cayman, B.W.I.
Tel.: 97500. Telex: 4333 RHBCO 

Stockbrokers 

Richardson Greenshields of Canada, Ltd.
P.O. Box 1095, Grand Cayman, B.W.I.
Tel: 94066 

Cayman Securities
P.O. Box 275, Grand Cayman, B.W.I.
Tel.: 94110 

Licensed Management Trustee Companies 

Paget-Brown, Ltd
P.O. Box 1111
Grand Cayman, B.W.I.
Tel.: 94908 

Bank Secrecy in the Caymans 

Switzerland, Panama, the Bahamas and Caymans have well-established bank secrecy laws designed to prevent unauthorized disclosure of a client’s financial affairs to outside authorities. Nevertheless, occasional cracks in Cayman bank secrecy have occurred. In 1976, when the IRS initiated their Operations Tradewinds and Project Havens to penetrate Cayman and Bahamian bank secrecy, one Cayman bank director was requested by the IRS to cooperate. But the IRS ran into a hedgerow. Here’s what happened. 

In January of 1976 Anthony Field, then managing director of a Cayman Bank, was served with a subpoena right at the Miami International Airport directing him to appear before a federal grand jury. The grand jury was investigating possible criminal violations of U.S. tax laws. 

Mr. Field refused to answer questions on the grounds that he would be in violation of the secrecy provisions of the Cayman Bank & Trust Companies Law of 1966. Charged with contempt of court the case went to the Supreme Court, but by this time Mr. Field, who had never broken his silence, was back in the Caymans. To try to force Mr. Field to testify the IRS would have to serve him with a new subpoena, should he ever step foot in the USA again. Needless to say, there was never another subpoena served Mr. Field. 

In response to the Field case, the Caymans enacted a new secrecy law designed to strengthen the old law. Hon, Thomas C. Jefferson, Financial Secretary of the Cayman Islands, said in July of 1986, while speaking about the new “Mutual Legal Assistance Treaty” with the U.S. designed to combat illegal money laundering… 

“Our government has always aimed for a clean operation of our financial center. This is not only good sense for the long term, but reflects the upstanding character of the Caymanian, whose Christian principles have led to the banning of casinos and all other forms of gambling.”

“At the same time, we have recognized the essential need of secrecy for the business transacted here, hence the “Confidential Relationships (Preservation) Law”, enacted in 1979 and reinforced by heavier penalties in 1979. We remain convinced that the legitimate investor has a right to confidentiality when he does business in our islands…” 

“And it is important to note here that we in the Caymans do not recognize tax avoidance as a crime and the treaty (with the USA) specifically excludes tax offenses unless they involve the unlawful proceeds of a crime covered by the treaty. The treaty needs cause no fears to anyone who does not engage in crime.” –

            Thomas C. Jefferson,
            Financial Secretary of the Cayman Islands,
            Government Administration Building,
            George Town, Grand Cayman, B.W.I.
            Telephone: 94844, Ext. 112

In 1976, secrecy of ownership was reinforced further when the Cayman government enacted its Confidential Relationships Law (Preservation Law of 1976).

As Andy McNab (deputy inspector of banking and trusts) points out, “The Caymans have an unparalleled infrastructure within the region and the islands’ traditional use as a major transit point for inter-bank transfers, combined with political stability, have made the Caymans what they are today.”

One final point about bank secrecy and legal tax avoidance. It was perhaps best expressed by international tax lawyer and professor Marshal J. Langer in his book, Practical International Tax Planning, what doctrine and code of conduct planners should stick to. In chapter 1, titled “The Growth of Excessive Taxation”, Langer writes…

“Tax evasion is illegal. This is not a book on how to evade taxes. Tax evasion is illegal. Tax avoidance is legal. This book will discuss foreign tax planning, including some ways in which tax havens and financial centers are used by taxpayers to avoid or reduce their tax liability in a legal manner.”

Cayman Islands Contacts

Cayman Islands Department of Tourism
420 Lexington Ave., Suite 2312
New York, N.Y. 10170
(212) 682-5582

Cayman Islands Chamber of Commerce
The Secretary c/o
P.O. Box 1000
George Town, Grand Cayman, B.W.I.
Telephone: 94746

The Caymanian Compass
(Newspaper, daily, Monday to Friday)
The Cayman Free Press LTD.
P.O. Box 1365
Grand Cayman, B.W.I.
Telephone: 95111

Mr. Richard Chalmers
Inspector of Banks & Trust Companies
Government administration Bldg.
George Town, Grand Cayman, B.W.I.
Telephone: 94844, ext. 156

Advantages of Using the Cayman Islands as an Offshore Financial Center

Apart from a nominal capitalization tax of CI$10 per adult male (which was abolished in 1985), the Cayman Islands never have had any form of direct taxation, so that “anyone doing business in the islands can be assured that his dollars will work for him free of such depredations as income tax, profits tax, or corporation tax.”

Advantages to overseas investors, bankers or companies can be summarized as follows:

  • The stability of a well and progressively governed colony of Britain.
  • Low crime rate, social harmony, absence of racial tensions.
  • Excellent telecommunications, the latest in technology, efficient air services provided by 4 international airlines, reliable shipping links, regular freight supply.
  • Proximity to United States – about 2-½ hour to Miami, with good daily connections worldwide.
  • Highly developed infrastructures, including ports, airfields, roads, utilities and medical and educational services.
  • No exchange controls
  • Fixed rate of exchange CI$1 = US$1.20
  • Modern commercial legislation and legal judicial systems based on that in United Kingdom.
  • Severe penalties ensure confidentiality between client and professionals under Confidentiality Relationship (Preservation) Law, qualified only by Government’s accepted duty to assist U.S. Government in the investigation of drug-related and other serious crimes.

Offshore Holding Companies

According to Company Registrar, the number of companies registered in Cayman went over the 32,000 mark in 1993. This continues an upward spiral with a 200% increase in the last seven years.

In 1993 there were 2,696 new exempted companies registered, making the total number of exempted companies 16,465. This is increasing – in the six months to June 30, 1994, there were 1,897 new registrations.

And the Cayman government has recently lowered the annual renewal fees for exempted companies to US$500. Most foreign investors choose the exempted company because names of shareholders and directors are not open to public inspection.

Caymanians have historically had distaste for taxation, and this has provided a natural setting for the system of laws and regulations, dating back to the 1960’s, which have created and encouraged the growth of the Islands as an offshore financial center. Tax lawyers refer to the Caymans as a no-tax or zero tax haven. Taxes or all types simply do not exist in this country.

Like the other no-tax havens of the Bahamas, Bermuda, Anguilla, Vanuatu and Nauru (in the South Pacific), the Caymans have traditionally enjoyed a complete absence of direct taxation. The only form of direct taxation the Cayman Islands ever had was a $10 a year tax on adult males, but that was abolished in 1985.

New Mutual Fund Law

The Cayman government has been a leader in the introduction of new legislation specifically designed to attract new Mutual fund Law, designed primarily for institutions and wealthy individuals.

It was in June of 1993, that the Caymans passed its Mutual Fund Law. This legislation was designed to be self-regulating and flexible so to meet the needs of the 48 mutual fund administrators already licensed in the Caymans, including Goldman Sachs, State Street Bank, and Bank America. While the fund administrators need to be licensed, the fund itself need not be licensed.

The Section 4(3) Mutual Fund must stipulate the minimum investment per investor at $48,000 or have its equity interests listed on a recognized stock exchange. The Mutual Fund Law requires a simple registration with the CI Inspector.

Anthony Travers, senior partner of the law firm Maples & Calder, has argued that the new Mutual Fund Law wasn’t really necessary. “There existed and continues to exist good argument that the introduction of mutual fund regulation was neither necessary nor essential.”

“The Cayman’s fund industry has always been privately placed or structured for specific institutions, and there was never any market-driven need to obtain Designated Territory or Ucits status for funds.

However, with the tremendous growth of Luxembourg’s mutual fund industry, the Caymans thought it time and appropriate to jump on the bandwagon and create a Mutual Fund Law.

In the Bahamas and the BVI, mutual funds can be formed under the respective IBC Acts. Since this often requires the drafting of a special Memorandum and Articles of Association designed especially for an investment company, as well as Investment Advisory Agreements, Subscription Agreements, etc., the costs usually is run much higher.

Mutual funds formed in the BVI can cost upwards of US$15,000 to organize. One of my lead banks here in Nassau charges $10,000 for a mutual fund. My group can register a mutual fund here in Nassau for $3,000. Ordinarily, an IBC costs $1,950 with us.

Limited Duration Company

The Caymans was also the first to set up its Limited Duration Company, not primarily designed for funds but as a corporation which is treated as a partnership for U.S. tax purposes “enabling a flow-through” but without the complexity of the limited partnership structure.

LDCs have been used to establish mutual funds both for inward and outward investment in the U.S., and may be used to access double taxation treaty networks.

Streamlining the Companies Law

Other changes that have recently been enacted to the Cayman’s Companies Law include allowing companies to be formed with a single subscriber. Allowing companies to repurchase their own ordinary shares as well as redeemable referred shares. A company’s Memorandum of Association is now not required to stipulate its objects if its business is legal.

(Courtesy of New Providence Press: Tax Havens of the World).

Find the contact names, addresses, numbers and information for local government offices, banks, accountants, company formation services, investment and management companies, advisors, experts, maildrops, real estate agents and other useful local contacts in the THE OFFSHORE MANUAL & DIRECTORY.

 
 

This site is designed for Internet Explorer 4+ or Netscape 6+ with screen resolutions of 1024x768 pixels or greater.
Web site copyright © 1996-2006 by Dr. K.F.B. Weiss. All rights reserved. Unauthorized use prohibited.
For comments or questions about this site, please contact our webmaster. The web site was last updated on .