The British Cayman Islands: From a pirate mecca to a paradise for the rich, its essence of hiding money has never changed

Cayman Islands, I believe many people have heard of this name.

It is known as a paradise for capital and a paradise for tax avoidance. Many companies around the world are registered here.

So what is this island like, and how did it become a tax haven?

Open the world map and you have to look very carefully to find that the Cayman Islands are located in the Caribbean Sea of ??North America.

Administratively, it is an overseas territory of the United Kingdom. The entire Cayman Islands consists of 3 islands: Grand Cayman, Little Cayman and Cayman Brac.

Among them, Grand Cayman Island has the largest area, with 220 square kilometers, and is called the main island. The other two islands are relatively smaller, only 23 square kilometers and 16 square kilometers respectively.

The Cayman Islands have a flat terrain, and most of the island is plain. It has a tropical climate, with an average annual temperature of 24-30°C.

In addition to being the world's fifth largest financial center and a famous tax haven, it is also a world-famous tourist resort. In particular, its warm water temperature and extremely clear water, coupled with its numerous diving spots, attract diving enthusiasts from all over the world.

As an island with finance and tourism as its pillar industries, the Cayman Islands does not have a large population, only about 65,000 people.

But its economy is very developed, with per capita GDP reaching nearly 60,000 US dollars.

Of course, this is mainly due to its preferential policies of no foreign exchange restrictions and no direct taxes, which has attracted many large companies from around the world to come to the island to engage in financial business.

Why did the Cayman Islands choose such a development path?

This is related to its history!

As an archipelago far away from the mainland, the Cayman Islands were discovered on May 10, 1503, during Columbus's fourth expedition to the New World.

It was originally named Turtle Island. It was not until a few decades later, in 1586, that the British navigator Francis Drake arrived at the island and it was renamed the Cayman Islands.

Later it became a British overseas colony together with Jamaica, under the jurisdiction of the Governor of Jamaica.

After the independence of Jamaica in 1962, the Cayman Islands became a direct British colony and was governed by the British royal family.

Since then, the Cayman Islands has taken off.

Originally there was a lack of resources here, and there was no established agriculture and industry. Although it was rich in seafood such as sharks, lobsters, and shells, these were not particularly competitive.

In the beginning, it was once a paradise for pirates who hid their looted wealth here. Today, its nature remains unchanged, where the rich avoid taxes.

In the 1960s, a large-scale independence movement broke out in the Bahamas, which affected the money laundering operations of criminal gangs in the United States. They had to find new locations.

The Cayman Islands’ relaxed policies and suitable geographical location came into their sight.

In 1972, the Cayman Islands promulgated a new decree that exempted non-residents from tax and only collected indirect taxes.

Under this law, personal property and corporate business income are not taxed, and the name of tax haven began.

According to statistics, 49 of the top 50 banks in the world have branch banks in the Cayman Islands. Together with financial institutions such as trusts and insurance companies, the total number exceeds 1,000.

There are more than 50,000 large companies registered on the island. The total size of the hedge funds registered by these companies in the Cayman Islands exceeds US$2.3 trillion, ranking first in the world.

This does not include the small companies that have registered here.

In a five-story building in George Town, the capital of the Cayman Islands, it is said that more than 10,000 new companies are registered here every year around the world.

This is all thanks to the policy of opening a company in the Cayman Islands, which does not require taxation and only requires the payment of some management fees every year. Therefore, both international giants and shell companies are flocking to this.

Those foreign giants we are familiar with, such as Apple, Microsoft, Facebook, Google and other international giants, are also registered here.

In fact, in addition to the Cayman Islands, the Virgin Islands and Bermuda in the Caribbean also have policies that do not require taxation.

Why can the Cayman Islands stand out among many competitors and become the most influential tax haven?

In addition to the well-known tax-free policy, there are several very important reasons why the Cayman Islands is able to attract companies from all over the world to register here.

The first is that the Cayman Islands does a very good job of confidentiality!

Coupled with the protection of the United Kingdom, the political situation in the Cayman Islands is quite stable. Therefore, many people regard this as the best option for tax evasion and money laundering, and there is almost no need to worry about their information being exposed.

The second is that the procedures for registering a company in the Cayman Islands are very simple!

It is basically the same as the personal account we open at the bank. Just fill in some basic information.

The third is to facilitate listing!

Many companies around the world, especially technology companies, want to be listed on the NASDAQ in the United States.

Because there are not many requirements for listing on Nasdaq, the company can pass even if it is not yet profitable. However, registering a company in the United States is not only cumbersome, but also requires a large amount of tax.

Therefore, registering a company in the Cayman Islands has become a curved path to listing for many companies.

And because the Cayman Islands is a British territory with high international recognition, companies registered in the Cayman Islands can also be directly listed on exchanges in major cities such as Singapore, Hong Kong, and London.

Moreover, through the Cayman Islands’ tax-free policy, many companies will use shell companies registered here to hide their actual profits, thus achieving the effect of tax avoidance.

Not only will the Cayman Islands not stop this behavior, it will also provide many conveniences and even directly provide illegal tax evasion and money laundering services.

That’s why it is known as a “tax evasion haven”, which allows many companies registered here to make a lot of money.

Nowadays, it has become a very common behavior for domestic companies to register or establish subsidiaries in the Cayman Islands.

In addition to tax avoidance, it is not subject to foreign exchange controls, making capital flow more convenient.

Moreover, some local governments have preferential policies for introducing foreign investment, which are not available to normal domestic enterprises.

It is also a very smart way to speculate by registering a company in the Cayman Islands, covering it up with foreign capital, and then investing in the country.

Having said so many advantages of registering a company in the Cayman Islands, are there no disadvantages?

In fact, there are some!

The most important thing is that this will weaken the national recognition of the brand among the people of the country.

For example, South Korea's Samsung Company wanted to register a subsidiary in the Cayman Islands, but it encountered strong opposition and protests from the Korean people, and finally had to withdraw to South Korea.

Germany and Japan are also very disgusted with this. So far, no major company has registered in the Cayman Islands.

With the changes in domestic national brand awareness, and corporate information becoming more and more open and transparent.

Chinese people are also dissatisfied with this behavior of making money in the domestic market while avoiding taxes abroad.

Even in the United States, investigations and sanctions against companies registered in the Cayman Islands have been frequent over the years.