Cayman Island – The tax haven country invested $3.7 bn in India in 2019-2020

Cayman Island a part of Jamaica which was ruled by Britishers until 1962. In 1962, Jamaica got independence from British. But Cayman Island was still under the control of Britishers. In short if we would like to understand more about Cayman, then it was discovered by Columbus as Las Tortugas which with times changed to Cayman. After Jamiaca got independence, Cayman Island came a part of British and is termed as British Overseas Territory. In the year 2009, something happened with the mutual understanding of major officials of Britain and Cayman which was a boon for Cayman. Cayman Island got the authority to introduce and execute major reforms like company law, insolvency law, banking etc. However still certain segments were under the Britishers like international law. Britain till date represents Cayman in the international forum.

What is Tax Haven Countries?

Tax Haven countries are those countries where there are no hard laws on tax. Some are there but those are not considered on a higher note when it comes to non-tax haven countries. Cayman Island is one such tax haven country. In Cayman Island there are no Income tax, vat, sales tax, capital gain tax, royalty tax, property tax, wealth tax, foreign exchange tax.

How Cayman Island generate revenue?

Let us talk over a model. Let’s say there is a person who would like to purchase goods worth $10 mn USD from a India and would like to sell it in USA in $20 mn. So, in this order he must pay the taxes in both the countries for doing this business. Now if he registers a company in a Cayman, and will exports the goods through that, he does not have to pay anything on taxes and the profit money of $10 mn will be deposited in Cayman. Now how can he take the profit out of Cayman. Simply by investing in companies in India. Cayman Island model is to earn less from a greater number of companies. That is reason Cayman Island has a lot of job opportunities. Whereas in India the model is total opposite. In India, more revenue is generated from a smaller number of companies.So where from they generate revenue. They generate from small segments like business license renewal, high import duty etc.

Source: Economic Times on 9^th June 2020 reported that Cayman Island’s FDI jumps to $3.7 bn in the fiscal year 2019-2020.