Archive for the ‘Individual’ Category

Cayman’s Incentive Package and You

Thursday, February 11th, 2010

Dramatic new incentives from the Cayman Islands Government (CIG) have now  revolutionised the immigration landscape for financial services firms and individuals intending to move their business to Cayman or invest in new businesses here.

What is it that Cayman is really offering?

The most significant attraction for business and investors is this:  In a world where government intervention is increasingly affecting every area of business activity Cayman remains the last bastion of pure capitalism.  A perfectly formed example of small, non-intrusive government in a high tax world.

The Tax Foundation organization in the United States calculates that Tax Freedom Day (the day when citizens actually get to keep their income having paid their annual dues to the government) will fall on April 13 for 2010.  This means the average American has to work about three and one-half months of the year for their government.  That is over a quarter of the year.

Tax Freedom Day in the UK fell on 14 May 2009 as reported by AdamSmith.org, meaning that for the first 134 days of the year every dollar earned by UK residents was handed over to their government.

In Canada, according to the Fraser Institute, Tax Freedom Day occurred on June 6 of 2009.   Nearly half a year’s income, 43% of an average family’s annual income, is taken by the various levels of government (municipal, provincial, and federal).

In the Cayman Islands our no direct tax system means that individuals and corporations keep 100 cents in every dollar of remuneration and bonus.  There are no direct taxes of any kind.  No income tax, no property tax, no capital gains tax, and no sales tax.  Government supports itself through indirect taxes such as import duties, licencing fees, airport fees, and work permit fees.  Not only does this encourage businesses and individuals to grow their income, knowing they can keep it , but it also provides incentive to the CIG to keep its costs in order and not expand government spending needlessly.

Additionally the Cayman Islands is a very stable jurisdiction.  Its non-intrusive government does not attempt to micro-manage the lives of its residents.  It offers a great lifestyle for visitors and residents, with first class schools, restaurants, shopping, and activities.  And the business infrastructure for financial services is second to none.

Since it established its financial services platform more than four decades ago, the Cayman Islands has grown into a leading global financial services centre supported by a sound legal and regulatory framework, world-class infrastructure, and high quality service providers.

The Cayman Islands is one of the world’s leading providers of institutionally focused, specialised financial services and a preferred destination for the structuring and domiciling of sophisticated financial services products.  It plays an important role in global markets by facilitating the flow of capital and lowering the cost of doing business.

You would be hard pressed to find another jurisdiction that can offer all of these advantages to protect your wealth, grow your business, and raise your family.

The American dream.  Now residing in Cayman.

For more information on the new government incentives to live, work, and invest in the Cayman Islands please visit: www.caymanfinance.gov.ky

Posted in Corporate, Incorporation, Individual, Tax Issues | 35 Comments »

The Need for Tax Competition

Tuesday, December 15th, 2009

For many months now Cayman Finance has spoken about the law of unintended consequences as it relates to overseas legislation on tax issues.  Today, a news report by the Times Online “City broker will relocate staff to avoid supertax” clearly validates both that warning from Cayman Finance and the need for tax competition globally.

As governments around the world feel more pressure to raise revenues in an increasingly lopsided battle with their national debt and future obligations it is vital that there be some kind of counterbalance to protect people from sudden and violent swings in tax rates.

The article, by Robert Lindsay, focuses on a single Broker firm, Tullett Prebon,  which provides special brokering services for investment banks and employs 700 brokers and staff in London.  But the facts apply broadly.  A new UK ‘supertax’ that will take 50% of bonuses over £25,000 awarded to banking sector employees is being implemented and is set to run until ‘at least’ next April.  Quite naturally few people believe the new tax would not be renewed in subsequent years.

As a result many of Tullett’s broking staff  have reportedly expressed an interest in moving away from the UK.  And competing firms overseas are using the occasion to aggressively recruit brokers away from London firms.

This could just be the thin end of the wedge as tax ‘grab’ policies encourage the highest income earners, those in the highest tax bracket that pay the most in both income and consumption taxes, to leave their home jurisdictions in search of places with equal standards of living where they can keep a larger percent of earned income.  The end result is higher tax policies leading to lower government revenues.

And this is exactly why tax competition between jurisdictions is necessary.  Without it, nations become empowered to target sectors, businesses, or even individuals with punitive taxation measures and there would be less incentive for the economy to grow earnings.  We believe that you have to risk capital to earn profits and the potential return has to justify the decision to put your capital in harms way.  Unrestrained taxation skews this natural process and actually constrains growth.

The difficulties facing the UK and US raises the question of whether the recent G20 focus on Offshore Financial Centres with low tax rates was really focused on the stability of the global financial system, or has the true goal been the elimination, or at least minimization, of tax competition globally?  Given that the root causes of the financial crisis were decisions made in G20 nations regarding bank lending and the failure to regulate we believe the answer is clear.

Posted in Banking, Corporate, Individual, Tax Issues | 108 Comments »