The Cayman Islands are a British overseas territory located in the western Caribbean Sea, comprising the islands of Grand Cayman, Cayman Brac, and Little Cayman. It is a major financial centre in the Caribbean. The Cayman Islands are located in the western Caribbean Sea. They are the peaks of a massive underwater ridge, known as the Cayman Trench, standing 8,000 feet (2,400 m) from the sea floor, which barely exceeds the surface. The islands lie in the centre of the Caribbean south of Cuba and West of Jamaica. They are situated about 400 miles (650 km) south of Miami, 180 miles (300 km) south of Cuba, and 195 miles (315 km) northwest of Jamaica. Grand Cayman is by far the biggest, with an area of 76 square miles (197 km²). The two “Sister Islands” of Cayman Brac and Little Cayman are located about 80 miles (130 km) east of Grand Cayman and have areas of 14 square miles (36 km²) and 10 square miles (25.9 km²) respectively. All three islands were formed by large coral heads covering submerged ice age peaks of western extensions of the Cuban Sierra Maestra range and are mostly flat. One notable exception to this is The Bluff on Cayman Brac’s eastern part, which rises to 140 feet (42.6 m) above sea level, the highest point on the island. Cayman avian fauna includes two endemic subspecies of Amazona parrots: Amazona leucocephala hesterna, or Cayman Brac Parrot, native only to Cayman Brac, and Amazona leucocephala caymanensis or Grand Cayman Parrot, which is native only to Grand Cayman. Another notable fauna is the endangered Blue Iguana, which is native to Grand Cayman. There is also the agouti and the Booby Birds on Cayman Brac.
The economy of the Cayman Islands was once centred around turtling. However, this industry began to disappear in the twentieth century and tourism and financial services began to become the economic mainstays during the 1970s. The United States is the Cayman Islands’ largest trading partner. With an average income of around $42,000, Caymanians enjoy the highest standard of living in the Caribbean. According to the CIA World Factbook, the Cayman Islands GDP per capita is the 12th highest in the world. The islands print their own currency, the Cayman Islands Dollar (KYD), which is pegged to the U.S. dollar at a fixed rate of 1 KYD = 1.25 USD. The government’s primary source of income is indirect taxation – there is no income tax or capital gains tax or corporation tax. An import duty of 5% to 20% is levied against goods imported into the islands. Few goods are exempt; notable examples include books, cameras and infant formula. The government charges licensing fees to financial institutions that operate in the islands as well as work permit fees for expatriate employees ranging from around US$500 for a clerk to around US$20,000 for a CEO. Tourism accounts for 70-75% of the annual GDP of the Cayman Islands. Of the millions of tourists that visit the islands annually, 99% visit Grand Cayman. George Town also serves as a major cruise ship port, which brings in 4,000 to 22,000 tourists a day, five days a week, depending on the number of ships in port. One of Grand Cayman’s (GCM) main attractions is the world-famous Seven Mile Beach on which a number of the island’s hotels and resorts are located. Seven Mile Beach is regarded by many as one of the best beaches in the world. Historical sites in GCM such as Pedro St. James Castle in BoddenTown also attract visitors. The Sister Islands – Little Cayman and Cayman Brac – also supply their own unique charm. The Cayman Islands is regarded as one of the world’s best SCUBA diving destinations because of its crystal-clear waters and pristine walls. Cayman Brac and Little Cayman are also elite SCUBA dive destinations. There are several snorkelling locations where tourists can swim with stingrays including the popular Stingray City, Grand Cayman. Divers find two shipwrecks off the shores of Cayman Brac particularly interesting including the MV Keith Tibbetts. See also: Scuba diving in the Cayman Islands Other Grand Cayman tourist attractions include the Ironshore landscape of Hell, the 240090- acre marine theme park Boatswain’s Beach, also home of the Cayman Turtle Farm, the production of gourmet sea salt, and the Mastic Trail, a hiking trail through the forests in the centre of the island. On Cayman Brac, a lighthouse and a few local museums are tourist draws. Little Cayman’s wildlife attracts nature lovers, especially bird watchers in search of the island’s Red-footed Booby population. Art and Culture are other features of the Cayman Islands that attract international attention. The National Museum and National Gallery preserve contemporary and dated art works of local and international talent. A Cultural History Exhibition is displayed within the museum, and teaches patrons about historical customs and traditions native to the Cayman Islands. The Gallery sponsors eight exhibitions every year and is located in the Harbour Place in George Town.
The Cayman Islands are a major international financial centre. With the biggest sectors being “banking, hedge fund formation and investment, structured finance and securitization, captive insurance, and general corporate activities.” Regulation and supervision of the financial services industry is the responsibility of the Cayman Islands Monetary Authority. The Cayman Islands are the fifth-largest banking centre in the world with $1.5 trillion in banking liabilities; they are home to 279 banks, as of June 2008, 19 of which are licensed to conduct banking activities with domestic and international clients, the remaining 260 are licensed to operate on an international basis with only limited domestic activity. One reason for the Cayman Islands’ success as an offshore financial centre has been the concentration of top-quality service providers. These include leading global financial institutions, over 80 administrators, leading accountancy practices (incl. the Big Four auditors), and offshore law practices. Since the introduction of the Mutual Funds Law in 1993, which has been copied by jurisdictions around the world, the Cayman Islands have grown to be the world’s leading offshore hedge fund jurisdiction. In June 2008 it passed 10,000 hedge fund registrations, and over the year ending June 2008 CIMA reported a net growth rate of 12% for hedge funds. Starting in the mid-late 1990s offshore financial centres, such as the Cayman Islands, came under increasing pressure from the OECD for their supposed “harmful” tax regimes, where the OECD wished to prevent low-tax regimes from having an unfair advantage in the global marketplace, and thus be harmful to the economies of more developed nations. The OECD threatened to place the Cayman Islands and other tax havens on a “black list” and impose sanctions against them. However the Cayman Islands successfully avoided being placed on the OECD black list in 2000 by committing to regulatory reform to improve transparency and begin information exchange with OECD member countries about their citizens. The Cayman Islands had previously (briefly) appeared on the FATF Blacklist in 2000, although its listing was thought to be harsh, and was criticised at the time. In 2004, under pressure from the UK, the Cayman Islands agreed in principle to implement the European Union Savings Directive (EUSD), but only after securing some important benefits for the financial services industry in the Cayman Islands. As the Cayman Islands are not subject to EU laws, the implementation of the EUSD is by way of bilateral agreements between each EU member state and the Cayman Islands. The government of the Cayman Islands agreed a model agreement, which set out how the EUSD would be implemented with the Cayman Islands. A report published by the International Monetary Fund (IMF), in March 2005, assessing supervision and regulation in the Cayman Islands’ banking, insurance and securities industries, as well as its anti-money laundering regime, recognised the jurisdiction’s comprehensive regulatory and compliance frameworks. “An extensive program of legislative, rule and guideline development has introduced an increasingly effective system of regulation, both formalising earlier practices and introducing enhanced procedures,” noted IMF assessors. The report further stated that “the supervisory system benefits from a well-developed banking infrastructure with an internationally experienced and qualified workforce as well as experienced lawyers, accountants and auditors,” adding that, “the overall compliance culture within Cayman is very strong, including the compliance culture related to AML (anti-money laundering) obligations…”.
There is no direct taxation imposed on Caymanians and Cayman Island companies. That means saving and investing in Cayman can turn out to be a pretty lucrative venture. Working here seems to be almost instant gratification because most of your paycheck doesn’t go to the taxman. There is indirect taxation where the government gets most of its income. A 20% duty is levied against imported goods. Some items are exempted like baby formula, books and cameras. Duty on automobiles depends on the class and make of the model; duty can reach up to 40% for expensive models. Financial institutions that operate in the islands are charged a flat licensing fee by the government. A 10% government tax is placed on all tourist accommodations in addition to the small fee each tourist pays upon getting on the island.
In order to work in the Cayman Islands as a non-citizen, a work permit is required. This involves passing a police background check and a health check. A prospective worker will not be granted a permit if certain medical conditions are present. Work permits are not issued after age 60. If you are an individual on special work a permit my be granted. The Cayman Islands presently imposes a controversial policy in relation to expatriate workers who require a work permit. Non-Caymanians are only permitted to reside and work within the Territory for a maximum of seven years unless they satisfy the criteria of key employees. The policy has been the subject of some controversy within the press. Law firms have been particularly upset by the recruitment difficulties that it has caused. Other less well remunerated employment sectors have been affected as well. Concerns about safety have been expressed by diving instructors and realtors have also expressed concerns. Others support the rollover as necessary to protect Caymanian identity in the face of large immigration of expatriate workers. Concerns have been expressed that in the long term, the policy may damage the pre-eminence of the Cayman Islands as an offshore financial centre by making it difficult to recruit and retain experienced staff from onshore financial centres. Government employees are no longer exempt from this “rollover” policy according to this report in a local newspaper . The Governor has decided to use his constitutional powers, which give him absolute control for the disposition of civil service employees, to determine which expatriate civil servants are dismissed after seven years service and which are not. This policy is enshrined in the Immigration Law, written by the UDP government, and subsequently enforced by the PPM government. Both governments agree to the term limits on foreign workers, and the majority of Caymanians also agree it is necessary to protect local culture, and heritage from being eroded by a large number of foreigners gaining residency/citizenship.