Company structure in the Cayman Islands
Legal basis - Common law
Legal framework - Corporate law
Company form - Exempt company (Company limited by shares)
Responsibility - The shareholders' liability for the company is limited to the amount of their respective shareholdings.
Economic substance - The Cayman Islands passed the International Tax Cooperation (Economic Substance) Act 2018, requiring businesses (e.g. exempt companies, LLCs and LLPs) to carry out relevant activities to meet substance requirements.
Relevant activities include fund management, banking, insurance, finance and leasing, distribution and service center activities, head office activities, intellectual property activities, shipping and holding companies.
This specifically concerns companies engaged in financial services, insurance and investment activities; business management services to affiliated companies; operation, rental or charter of ships carrying passengers, cargo and mail by sea, or using, maintaining or leasing containers; companies marketing goods with and / or providing services to affiliates; companies deriving income from the exploitation of intellectual property rights; and pure holding companies.
Note that investment fund vehicles are explicitly excluded from this legislation.
Companies carrying out relevant activities must pass the economic substance test - they must:
- conduct its main Cayman income-generating activities (which are defined in law).
- be directed and managed from Cayman.
- have an adequate amount of operating expenses incurred in or from the islands.
- have an adequate physical presence (including maintaining an establishment or factory, tangible capital) on the islands.
- have a sufficient number of full-time staff or other appropriately qualified staff on the islands.
Holding companies that only hold interests in other entities and earn only dividends and capital gains will be subject to a reduced economic substance test - they must have met all applicable filing requirements and must have adequate human resources and adequate premises on the islands for the holding and management of equity participations.
With regard to intellectual property holding companies - companies that exploit intellectual property rights and:
- have not created such an IP address
- have acquired the intellectual property of a company of the same group structure or of a third party which has carried out research and development activities outside the Cayman Islands
- and grants intellectual property to one or more companies of the same group
or does not perform research and development, branding or distribution as part of its basic income generating activities in the Cayman Islands - are considered high risk intellectual property businesses and may be subject to a improved testing of substance requirements.
All businesses in the Cayman Islands are required to notify the Authority annually - indicating whether or not they are carrying out relevant activities.
Businesses carrying out relevant activities are required to file a basic declaration of the amount and type of income with regard to activity, expenses, assets, management, employees and physical presence, among other requirements. Existing businesses incorporated on or before December 31, 2018 will be required to comply with the substance requirements by June 30, 2019.
Substance requirement filings will be reviewed by the designated authority to ensure that these entities have adequate economic substance on the islands. Companies that fail the substance test will be instructed on how to respond to the test and face a fine of up to KYD 10,000.
Continued failure to comply with the test the following year may result in higher fines of up to KYD 100,000.
Share capital - There is no authorized share capital and the shares can be denominated in one or more currencies. The shares may be with or without par or par value, issued at a premium over the par value, in fractions of shares, preferred, deferred or other special rights. Bearer shares are not permitted. The contact details of the shareholders are not accessible to the public. Nominees are allowed.
Shareholders – The exempt companies can be formed by one or more shareholders, which can be natural or legal persons, residents or non-residents, without restrictions. Shareholder details are not being made public.
Administrators - At least one administrator is required, who can be a natural person or a legal person. The contact details of the directors are not accessible to the public. Appointed directors are authorized.
Secretary - The appointment of managers as a secretary is optional and can be a natural or legal person, resident or non-resident.
Registered address - An exempt company must have a registered office in the Cayman Islands, provided by an authorized service provider.
General assembly - Annual general meetings are not compulsory. However, if meetings do take place, they can take place anywhere in the world and perhaps by proxy. The minutes of the meeting must be kept, but the minute book can be kept anywhere.
Electronic signature - authorized.
Re-domiciliation - Incoming and outgoing redomiciliation is authorized.
Conformity - Cayman Islands exempt businesses must maintain accounting records. Records cannot be kept in Cayman, but must be made available at head office if an order or notice to file under the Tax Information Administration Act is rendered.
Exempt companies are not required to file financial statements or tax returns. An annual report must be submitted annually indicating whether there has been a modification of the memorandum of association and confirming that no business has been conducted in the jurisdiction. Exempt companies are also required to pay an annual government fee, the amount of which will depend on the authorized share capital of the company.
Key figures of companies in Cayman Islands
|Official name||Cayman Islands|
|Proper noun||Cayman Islands|
|Population||64,420 inhabitants (2018)|
|Population growth||3.35 % / year|
|Density||241.27 inhabitants / km²|
|GDP||3.571 billion $USD (2017)|
|GDP / capita||56,334 $USD (2017)|
|GDP growth||3.00 % / year (2017)|
|Life expectancy||81.53 years (2018)|
|Birth-rate||9.90 ‰ (2018)|
|Fertility rate||1.84 children / woman (2018)|
|Mortality rate||3.40 ‰ (2018)|
|Child mortality rate||1.40 ‰ (2018)|
|Literacy rate||100,00 % (2019)|
|Change||Cayman Islands Dollar ($ KYD)|
|HDI||0,888 / 1 (2013)|
|Nature of State||United Kingdom Overseas Territory|
|Head of state||Queen Elizabeth II; Governor Martyn Roper|
|National Holiday||July 1 (Constitution Day 1959)|
|Codes ISO||KY, CYM|
|Tourists||418,400 people (2017)|
A tourist and tax haven
The Cayman Islands are a British Overseas Territory located in the Caribbean. The archipelago includes the three islands of Grand Cayman, Caiman Brac and Little Cayman, located south of Cuba and northeast of Honduras, between Jamaica and the Yucatán peninsula in Mexico.
The Cayman Islands are a true luxury tourist paradise, as well as a tax haven. Home to a large number of banks and financial institutions that offer wealthy clients from all over the world to recycle, if not launder, in secret, money, the archipelago is placed on a gray list of tax havens in the OECD.
The United Kingdom could however put it in order quickly, proof that the real political will to eradicate this form of delinquency is absent despite the rhetoric.
The archipelago sees its population increase very strongly year after year. Its growth rate is worthy of the most underdeveloped countries, even though, on the contrary, the territory is one of the best off financially and one of the most developed in all the Caribbean.
Cayman Islands Corporate Taxation
Corporate tax rate (IS)
|Global CIT rate (%)||N / A|
Corporate tax (IS) due dates
|CIT return deadline||There is no tax declaration requirement in the Cayman Islands.|
|CIT final payment due date||N / A|
|Estimated due dates for CIT payments||N / A|
Personal income tax rate (PPI)
|Global PIT rate (%)||N / A|
Personal income tax (PIT) due dates
|PIT return due date||N / A|
|IRP final payment due date||N / A|
|Estimated PIT Payment Due Dates||N / A|
Value added tax (VAT) rate
|Standard VAT rate (%)||N / A|
Withholding tax rate (WHT)
|WHT rate (%) (Div / Int / Roy)||N / A|
Capital gains tax rate (CGT)
|Corporate capital gains tax rate (%)||N / A|
|Tax rate for individual capital gains (%)||N / A|
Wealth / Equity Tax Rate
|Global wealth / equity tax rate (%)||N / A|
Rate of inheritance and gift tax
|Rate of inheritance tax (%)||N / A|
|Gift tax rate (%)||N / A|