The Cayman Islands is an independent overseas territory of the United Kingdom, comprising three islands: Grand Cayman, Cayman Brac, and Little Cayman. The administrative center is Georgetown. The total population is approximately 60,000.

The Cayman Islands are home to more than 100,000 companies that use the island’s jurisdiction to conduct business worldwide. One of the reasons for the popularity of the Cayman Islands as an offshore jurisdiction is that a wide range of opportunities, including tax exemptions, are available to companies incorporated on the island.

In the Cayman Islands, there is no tax burden on income, capital, sales, and capital gains for offshore companies. There is no income tax or inheritance tax. This makes these islands an ideal place to set up an offshore company to minimize tax risks. A company registered in this tax haven can also be used as a flexible tool for robust estate planning.

There are no currency exchange controls in this jurisdiction. This means that as a foreigner who has set up an offshore company within the Cayman Islands tax haven, you have the freedom to transact and transfer money internationally in any amount and currency that suits your needs. You don’t have to worry about government interference, regulations, or restrictions on currency transactions.

The Cayman Islands has a well-developed legal system based on English common law. The principal law governing companies in the Cayman Islands is the Companies Law (2020 version). This is a flexible legislation that provides companies with a wide range of options.

Advantages of Company Registration in Cayman Islands

Registering a company in the Cayman Islands offers several advantages:

Tax benefits
One of the main advantages is the absence of direct taxes such as income tax, capital gains tax, and corporation tax. This makes the Cayman Islands an attractive destination for businesses looking to minimize their tax liabilities.

Financial privacy
The Cayman Islands are known for their commitment to financial privacy. Companies registered here often enjoy a high level of privacy due to strong laws protecting the identity and financial data of company owners.

Ease of doing business
This jurisdiction is recognized for its efficient and business-friendly regulatory environment. The company registration process is relatively simple and the government actively creates a favorable environment for international companies.

Stable legal system
As a British Overseas Territory, the Cayman Islands operate under the English common law legal system. This provides a familiar and stable legal framework, which can be beneficial to businesses and investors.

No restrictions on foreign exchange transactions

There are no restrictions on foreign exchange transactions, allowing companies incorporated in the Cayman Islands to freely engage in international trade and financial transactions in a variety of currencies.

Global Recognition
The Cayman Islands has a strong reputation as a reputable offshore financial center. This can increase the credibility and global recognition of companies incorporated there, attracting international clients and investors.

Asset protection
The jurisdiction provides effective asset protection mechanisms, making it the preferred choice for those seeking to protect their assets through legal structures.

Strategic Location
Located in the Caribbean, the Cayman Islands serve as a strategic center for companies with international operations. The geographic location can be advantageous for companies involved in global trade and finance.

Flexible corporate structures
The Cayman Islands provides flexibility in corporate structures, allowing companies to tailor their organizational structure to meet their specific needs and goals.

Financial Services Hub
This jurisdiction is a major global financial service hub with a strong infrastructure and a wide range of financial services, including banking, investment funds, and insurance.

Types of Companies in the Cayman Islands

Various types of companies can be registered in the Cayman Islands, each with its characteristics and purposes. The most popular types are:

Exempted Company.
An exempted company is the type of company that is most common in the Cayman Islands. It is ideal for those who want to do business outside of the Cayman Islands. Exempted companies are exempt from local taxes and can do business anywhere in the world. They are often used for investment, holding assets, or international trade.

An exempt company can additionally obtain a Tax Exemption Certificate from the Cayman Islands government. This certificate ensures that the company will be exempt from paying taxes in the Cayman Islands for up to 20 years, even if direct taxation is introduced in the future. The Tax Exemption Certificate is an additional safeguard for companies that want to protect themselves from possible tax changes. The cost of obtaining a Tax Exemption Certificate is $2,500.

Local Company.
A resident company is a type of company that is incorporated in the Cayman Islands and carries on business on the island. It is subject to the Cayman Islands Companies Law as well as the Local Companies (Control) Law >1995.

The Local Companies (Control) Law 1995 requires all local companies to be licensed and to submit a list of their shareholders annually. Shares in resident companies must be registered shares and not bearer shares. Resident companies must hold annual general meetings and the register of members must be kept at a registered office and be available for public inspection. The name of the resident company must end in “Ltd” or “Limited”.

Limited Liability Company (LLC).
An LLC combines the features of a corporation and a partnership, providing limited liability to its members. This type of company is popular with investment funds and joint ventures. Unlike companies described in the Companies Act, an LLC does not have share capital. Instead, members acquire an equity interest in the LLC. The LLC is managed by its members and/or managers.

The process of forming an LLC is similar to forming a tax-exempt limited liability partnership in the Cayman Islands. The LLC Law provides the ability to merge, consolidate, or convert an existing Cayman Islands company into an LLC. It also allows non-Cayman Islands companies to re-register and continue to operate in the Cayman Islands in the form of an LLC.

Each January, the company is required to file a report with the Registrar confirming compliance with the provisions of the LLC Law during the previous calendar year and to pay an annual fee set by the Registrar.

In the Cayman Islands, partnerships are a company formation structure in which two or more persons pool their resources and participate in the management of the business. There are two main types of partnerships – General Partnership and Limited Partnership. Partnerships in the Cayman Islands provide tax benefits, which makes them attractive for international business. They are not required to set a minimum authorized capital, which gives businesses greater flexibility in financial planning. Privacy laws help keep the owners and operations of the partnership confidential. Flexibility in structure allows for forms to be created to suit specific business needs.

Overseas or foreign company.
Companies incorporated outside the Cayman Islands can enjoy the rights and benefits of companies incorporated in the Cayman Islands. This means that they can own property, conduct business, and associate with other companies in the Cayman Islands.

Most clients prefer to choose a Cayman Islands exempt company because of its greater flexibility and fewer restrictions and requirements than other company formation structures in these islands. Clients who intend to start a business locally in the Cayman Islands will need to set up a company with ordinary residence. It is advisable to seek professional advice before selecting the type of company to ensure compliance with local laws and regulations.

Requirements for opening a formation in Cayman Islands

The legal requirements for doing business in the Cayman Islands can vary depending on the type of company chosen. They typically include the following:

  • registration of a trading name, which must be unique and comply with the naming rules in the islands;
  • a registered address, which for individuals is the residential address and for legal entities is the registered office in the Cayman Islands;
  • Memorandum of Association, which specifies the form of the legal entity and other relevant information;
  • for limited liability companies: a minimum of one shareholder and one director (a natural person of any nationality or other corporation), and this can be the same person (company);
  • local registered agent: a natural or legal person who resides or is registered in the Cayman Islands and acts as an official representative of the company;
  • provision of a full set of personal data of shareholders and founders;
  • no minimum paid-up share capital requirement.

It is recommended that you consult with a qualified legal or tax advisor for further information on the specific requirements for your business.

Process for Opening a Company in Cayman Islands

  • Stage 1

Company name.

The first step is to choose a unique company name available for registration in the Cayman Islands. It should be written in English and end with a word or phrase indicating the legal form of the company, such as “Limited” (LTD). You can check the uniqueness of a name with the Registrar of Companies online.

  • Stage 2

Designation of Registered Agent.

All companies incorporated in the Cayman Islands are required to have a registered agent – a local person or company who is responsible for obtaining legal documents on behalf of the company.

  • Stage 3

Document Preparation.

The list of documents required to apply for company registration in the Cayman Islands may vary depending on the type of company and its structure. However, in general, the following may be required:

  • formal registration statement with basic information about the company, its structure and operations;
  • bylaws defining the company’s internal rules and regulations, including the management structure;
  • the company’s business plan;
  • documents confirming the identity and registered addresses of the company’s directors and shareholders;
  • documents confirming the company’s registered address in the Cayman Islands;
  • if someone is acting on behalf of the company, documents confirming their authority may be required;
  • financial documents confirming the financial stability of the company may be required;
  • information about the ultimate owner of the company, including ownership interest;
  • a formal declaration of appointment of the company’s directors and shareholders;
  • documents confirming the consent of the persons to their appointment as directors and shareholders;

All documents must be translated into English and notarized.

  • Stage 4

Apply for registration.

The application form for registration together with the Articles of Association and necessary documents must be submitted to the Registrar of Companies.

To ensure full compliance with the incorporation process, it is important to consult with Fast Offshore Licenses professionals before submitting your company registration documents.

  • Stage 5

Pay the registration fee.

  • Stage 6

Obtain a certificate of incorporation.

Once the Registrar of Companies has approved the application, a certificate of incorporation will be issued to the company. This certificate is proof that the company has been legally incorporated and is a valid legal entity in the Cayman Islands.

  • Stage 7

Open a bank account for the business.

Once you have received your certificate of incorporation, you will need to open a corporate bank account for your company. To open a bank account in the Cayman Islands, you will need to fill out a detailed application form and provide various documents. These documents must include information about the company, its shareholders, and directors. Some banks also request identification of the individuals who own or control the company.

You may also need to obtain a business license from the Department of Commerce and Licensing.

If you plan to hire employees in the Cayman Islands, you will need to register with the Department of Immigration.

Reporting Obligations in Cayman Islands

The reporting obligations in the Cayman Islands are a set of requirements that companies and other organizations must comply with to ensure transparency and accountability. These obligations vary depending on the type of organization and its activities.

The Cayman Islands offers simplified reporting requirements for most companies. Companies are only required to file annual reports with the Registrar. Reports of exempt companies must state that the company has not made any changes to its articles of incorporation, has carried on business outside the Cayman Islands, and is not trading in the Cayman Islands.

Also, all companies are required to file tax returns, even if they do not pay taxes.

In addition to general reporting obligations, there are also sector-specific reporting obligations for certain types of businesses. For example, financial institutions are required to file prudential and statistical reports with the Cayman Islands Monetary Authority (CIMA), and insurance companies are required to file reports with the Cayman Islands Insurance Regulatory Authority (CIRA).

Failure to comply with reporting obligations can result in penalties including fines and imprisonment. In some cases, non-compliance may also result in the revocation of a company’s license or registration.

Company Registry Fees in Cayman Islands

The registration fee for setting up a company in the Cayman Islands varies depending on the type of company and the amount of its authorized capital. For example, for a company with authorized capital up to $42,000, which is exempt from tax, the registration fee will be approximately $840.

For business owners who choose to set up a company in the Cayman Islands, it is important to note that there are other fees in addition to registration fees. These may include fees designed to register intellectual property, which may be relevant for those interested in this aspect of the business.

Businesses are also required to pay regular annual renewal fees for company registration, and these vary depending on the type of company and the size of its capital. Current fees can be found on the official website of the regulator.

Note that these fees are subject to change. For example, starting January 1, 2024, due to the government’s investment in improving the provision of Registrar of Companies services, annual company fees will increase slightly. If you are considering incorporating a company in this jurisdiction, our team will be able to provide you with up-to-date information on the current fees as well as the other requirements for starting a company in the Cayman Islands.

FAQ about a Company formation in the Cayman Islands

How to open a company in the Cayman Islands?

To open a company in the Cayman Islands, select the type of company, reserve a unique name, appoint directors and shareholders, provide an office address, prepare the necessary documents, and apply to the Registrar of Companies. Pay the registration fees, wait for approval, and receive the Certificate of Incorporation.

How much does it cost to start a company in the Cayman Islands?

The cost of starting a company in the Cayman Islands can vary depending on the type of company, its authorized capital, and the services that may be required.

How long does it take to register a company in the Cayman Islands?

The time required to incorporate a company in the Cayman Islands can vary depending on several factors, including the type of company and the completeness of the documents provided. In total, the entire process from reserving the name to receiving the Certificate of Incorporation can take approximately 2 to 4 weeks, assuming all documents are in order.

Can a foreigner open a business in the Cayman Islands?

Yes, foreigners can open a business in the Cayman Islands. The Cayman Islands provides a favorable business environment by encouraging foreign investment. As an individual or company outside of this jurisdiction, you can form various types of companies such as exempted companies, limited liability companies (LLCs), partnerships, and others.

Why do people register companies in the Cayman Islands?

Companies incorporated in the Cayman Islands because of the absence of direct taxes, high levels of financial privacy, a stable legal system, and flexible company structures. This jurisdiction also provides opportunities for asset protection and the free movement of funds in various currencies. The Caymans are an international financial center, attracting diverse businesses from around the world.

Is Cayman Island tax-free?

The Cayman Islands is often viewed as a tax-neutral jurisdiction rather than a fully tax-free jurisdiction. There is no direct corporation tax, capital gains tax, or inheritance tax, but companies are subject to certain fees such as incorporation and annual fees. In addition, persons or organizations engaged in business activities outside the Cayman Islands may be subject to taxation in their home countries.

What are the disadvantages of incorporating in the Cayman Islands?

Registering a company in the Cayman Islands has its advantages, but there are also disadvantages. The Cayman Islands have been repeatedly criticized for being used in some cases for tax evasion and money laundering. This can create reputational risks for companies operating in the jurisdiction. The Cayman Islands itself has a small local market, which may not be ideal for companies primarily focused on local customers.

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