I know the Cayman Islands are a top offshore financial center. but what exactly does that mean?

Question

I know they are tax-free but does that mean that corporations based out of there do not have to pay taxes, I wanna know what makes them so special? Thanks for anyhelp

Answer 1

Cayman Islands is a fiscal paradise... what this usually means (there are some others like Panama) is that companies based in here don't have to pay any taxes at all for any activity performed elsewhere. This is usually, 0 income tax for products or services that are sold anywhere else in the world. This would also apply for people.. if they make their $$ elsewhere they don't have to present Income Statements to anyone in Cayman Islands.

Answer 2

What it means and what makes them special is simply that their government has decided NOT to charge taxes to its citizens or companies based there.

However they make up for the lack of such revenues via fees, lots of them.

Most of the offshore banks based in the Cayman Islands are nothing more than one room, one person and a set of computer servers.

The US however wants countries like Cayman to become more stringent because it is easier to launder money or evade taxes with such money havens.

Answer 3

You can find better privacy tax free jurisdictions than the cayman islands. To learn why the caymans is not a good offshore jurisdiction go here:
http://www.panamalaw.org/jurisdictions_to_avoid_cayman.html
http://www.panamalaw.org/compare_offshore_jurisdictions.html