Cayman Islands Offshore Legal and Tax Regime

Cayman Islands Offshore Legal and Tax Regime: "The Cayman Islands Government has constructed a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation in Cayman other than stamp duty and import duties (see Direct Corporate Taxation). There are more than 92,000 companies registered in Cayman, along with about 250 banks and 749 insurance companies. See Law of Offshore for a detailed treatment of the legal regimes for Banking, Insurance, Trust Management and Mutual Funds. In this section offshore corporate forms are summarised, along with details of the fees payable by the various types of financial institution."

In June 2000, the Cayman Islands was identified by the FATF as non-cooperative in the fight against global money laundering. The result of this is that the Cayman Islands was one of fifteen tax jurisdictions placed on a blacklist. Each offending tax haven had a year in which to correct its tax regulations and legislation. The FATF released its next annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative. Only four were removed from the list, including the Cayman Islands (the other three being the Bahamas, Liechtenstein and Panama). The Cayman Islands was praised by the FATF for its substantial efforts to conform to forty recommendations set out by the FATF in a code of good practice governing money laundering.

During 2003 the Cayman government battled to avoid inclusion in the scope of the EU's Savings Tax Directive, but in the end was forced to give in by the UK Treasury, and began applying the information exchange model under the Directive from July 1, 2005. This means that information about interest on savings paid to citizens of European member states is being forwarded to the tax authorities of the member state in question.

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