The Cayman Islands have always been an attractive place to incorporate a business because of its well-developed and stable economy. It is also ‘white-listed’, as unlike many other tax havens, the Cayman Islands follow international tax regulations despite having no income taxes.
Economy of Cayman Islands
The economy of the Cayman Islands, a British overseas territory located in the western Caribbean Sea, is mainly fueled by the tourism sector and by the financial services sector, together representing 50–60 percent of the country’s gross domestic product (GDP). Unspoiled beaches, duty-free shopping, scuba diving, and deep-sea fishing draw almost a million visitors to the islands each year. Due to the well-developed tourist industry, many citizens work in service jobs in that sector. There are 100,000 registered companies there, more than the population itself. The Cayman Islands Investment Bureau, a government agency, has been established with the mandate of promoting investment and economic development in the territory.
The Cayman Islands is seeking to diversify beyond its two traditional industries, and invest in health care and technology. Cayman Enterprise City is a special economic zone that was opened in 2011 for technology, finance, and education investment. Cayman Sea Salt (producing gourmet sea salt) and Cayman Logwood products are now made in the Cayman Islands.
Caymanians have the highest standard of living in the Caribbean
Cayman Islands GDP per capita is the 38th highest in the world. The territory prints its own currency, the Cayman Islands dollar (KYD), which is pegged to the US dollar US$1.227 to 1 KYD.
The government’s primary source of income is indirect taxation: there is no income tax, capital gains tax, or corporation tax. An import duty of 5% to 22% (automobiles 29.5% to 100%) is levied against goods imported into the islands. Few goods are exempt; notable exemptions include books, cameras, gold, and perfume.
Because the islands cannot produce enough goods to support the population, about 90% of their food and consumer goods must be imported. In addition, the islands have few natural fresh water resources. Desalination of sea water is used to solve this. Despite those challenges, the Caymanians enjoy one of the highest outputs per capita and one of the highest standards of living in the world.
Cayman Islands Economic Indicators
Cayman Islands GDP Growth Rate
International finance is the most important sector of the economy, and accounts for around 55 percent of GDP and 40 percent of government revenue. High-end tourism is also crucial, and accounts for around 30 percent of GDP. The Gross Domestic Product (GDP) in Cayman Islands expanded 3.80 percent in the third quarter of 2019 over the same quarter of the previous year.
Cayman Islands Inflation Rate
In Cayman Islands, the most important category in the consumer price index is Housing and Utilities (39.4 percent of total weight). Miscellaneous Goods and Services accounts for 13 percent; Transport for 9.6 percent; Food and Non-Alcoholic Beverages for 8 percent; Communication for 7 percent and Furniture, Household Goods and Maintenance for 5.6 percent. Recreation and Culture; Restaurants and Hotels; Clothing and Footwear; Education; Health and Alcoholic beverages and Tobacco account for the remaining 17.4 percent of total weight.
Cayman Islands Unemployment Rate
In Cayman Islands, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. Unemployment Rate in Cayman Islands increased to 3.50 percent in 2019 from 2.80 percent in 2018.
Cayman Islands Government Debt to GDP
Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Government Debt to GDP in Cayman Islands decreased to 5.70 percent in 2019 from 9.10 percent in 2018.
Cayman Islands Balance of Trade
The Cayman Islands run consistent trade deficits as the country imports most of what it consumes. The Cayman Islands mostly exports aircraft, transportation vessels, recreational vehicles, fuel, jewellery and paintings. The Cayman Islands mostly imports recreational vehicles, coal, transportation vehicles, aircraft, fuel, soybeans, natural gas, jewellery and furniture. The Cayman Islands’ main trading partner is the United States, accounting for over 80 percent of total trade. Others include Germany, Switzerland, the United Kingdom, Jamaica and Mexico. Cayman Islands recorded a trade deficit of 1138.40 KYD Million in 2019.
Cayman Islands Currency Dollar
The USDKYD spot exchange rate specifies how much one currency is currently worth in terms of the other.
Cayman Islands Credit Rating
Moody’s credit rating for Cayman Islands was last set at Aa3 with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Cayman Islands thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Cayman Islands as reported by major credit rating agencies.
Taxation in Cayman Islands
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Starting a Business in Cayman Islands