The Cayman Islands, located in the western Caribbean Sea, are picturesque: white sandy shores, clear blue water, lush green palm trees. The islands, with just 55,000 residents and a gorgeous tropical climate, come to mind to many as an ideal vacation spot.
But what about a hub for tech firms?
Nearly 2,000 Canadians have already made Cayman their home, a number of them business owners. It’s becoming increasingly common to maintain headquarters in Canada but to use the Cayman Islands for international operations and sales.
Here are a few reasons why.
1. Zero taxation.
The most obvious reason for setting up shop in Cayman Enterprise City, an award-winning Special Economic Zone, is because there is no corporate tax, income tax, payroll tax, or even sales tax for Canadians. As a result, there’s more than 160 international companies with a physical office presence in the zone. Oh, and there’s also no capital gains tax should you choose to exit.
2. No red tape.
Business owners can bring staff in from Canada and obtain a five-year renewable work visa within five days. A fast-track setup process means companies can get legally operational with staff on the ground inside of a month.
3. The Canadian government is friendly with Cayman.
The Canadian Government has signed a Tax Information Exchange Agreement with the Cayman Islands Government and Canadian-resident corporations may now establish or re-domicile a non-resident controlled foreign affiliate corporate (subsidiary) in the Cayman Islands and, provided such subsidiary earns active business income, the subsidiary will be able to take advantage of “exempt surplus” tax rules for Canadian corporations. Such exempt surplus can be repatriated to the Canadian-resident parent corporation as a tax-free intercorporate dividend.
4. The lifestyle is great.
A perfectly sunny island that happily hosts all manner of outdoor activity. A small physical region means no commuting. A small population creates a friendly, tight-knit community of locals, many of which are expats too. What’s not to love about all that?
“The head office of our global company is in Vancouver and we set up in Cayman Enterprise City because it ticked all our boxes,” explains Michael Kader, president of AirG Global Holdings. “We looked at several other jurisdictions for our international holdings but CEC made it easy and cost-effective and provided a licensing and immigration solution in a one stop shop.”
Cayman Enterprise City says it has had “great interest and success” with Canadian companies so far, particularly with revenue-generating firms looking to expand internationally and turn a profit—the stage at which tax structuring generally becomes important. Unlike the US, where one has a repatriation tax on foreign income earned when you try to repatriate it, the Canadian government has the Tax Information Exchange Agreement with Cayman that permits Canadian entrepreneurs to repatriate profits tax-free (in certain circumstances).
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