Offshore Company in the Cayman Islands

Are the Cayman Islands an offshore jurisdiction?

In terms of the tax regime, yes. The Cayman Islands Government states that there is no income tax, corporate income tax, capital gains tax, inheritance tax or gift tax. Public revenue comes from duties and fees. That is why searches such as “Cayman Islands offshore” and “offshore company in the Cayman Islands” lead here.

Transparency requirements have grown in recent years. Since January 1, 2019, the islands have applied an Economic Substance Act, adopted following their work with the OECD Forum on Harmful Tax Practices. On July 31, 2024, the Beneficial Ownership Transparency Act, 2023 came into force as the new law on beneficial ownership disclosure. The absence of local taxes concerns the structure itself; the owner’s taxes in their country of residence still apply.

In the conclusions of the Council of the EU of October 9, 2026, the Cayman Islands appear neither on the list of non-cooperative jurisdictions (Annex I) nor on the list of jurisdictions with pending commitments (Annex II).

Who the Cayman Islands suit

The jurisdiction’s main industry is investment funds. The regulator, CIMA (Cayman Islands Monetary Authority), supervises them as a separate sector; its statistics show 13,187 mutual funds and 18,360 private funds registered as of September 30, 2026. The jurisdiction is considered for:

• funds and management companies that work with professional investors;
• SPVs for a single deal or a pool of co-investors;
• holding companies of international groups that want a jurisdiction investors already know.

For a small service business issuing a few invoices a month, maintaining a Cayman Islands structure is usually overkill. A holding company without outside investors is more often better served by an offshore company in the BVI, and a trading or IT business by Hong Kong, Singapore or the UK. The pairing with the BVI is covered in Cayman Islands vs BVI.

Key facts about an offshore company in the Cayman Islands

Who do the Cayman Islands belong to?

The islands are one of 14 overseas territories that keep a constitutional link with the United Kingdom. As the British government describes them, most of these territories are self-governing: each has its own constitution and a government that makes local laws. Companies here are therefore registered by the General Registry under the local Companies Act, and UK Companies House and Corporation Tax rules do not apply to Cayman structures. The islands’ government stresses that the budget is funded by import duties, stamp duty and other fees and runs without regular borrowing or financial aid from the UK.

The exempted company and the registry

For business abroad, the vehicle of choice is the exempted company. The General Registry describes it as a form for entities whose business is carried on mainly outside the Cayman Islands. The registered office is provided by licensed corporate service providers.

The law does not require an exempted company to keep its register of members open to public inspection. Beneficial ownership information is disclosed under a separate law, described below.

Documents and KYC

Before incorporation, the provider checks everyone involved in the structure. The usual requests are:

• a passport and proof of address for each shareholder, director and beneficial owner;
• an ownership chart up to the ultimate individuals;
• a description of the business, the clients’ countries and the expected volumes;
• documents on the source of the funds that will go into the capital;
• for a fund, information about the manager and draft investor documents.

The package depends on the provider and on whether the activity falls under CIMA supervision. We put it together in advance so that the review goes through the first time.

Annual obligations and reporting

• Annual return to the General Registry with a declaration that the business was carried on mainly abroad. Filing and payment of registry fees are usually handled by the registered office provider.
• Economic substance. If the activity falls within the categories of the Economic Substance Act, its requirements must be met; the regime is administered by the Department for International Tax Cooperation (DITC).
• Beneficial owners. The information is kept up to date with every change of ownership or control.
• Fund reporting to CIMA, if the structure operates as a registered fund.

Annual return deadlines are set by the Companies Act (2026 Revision). Under sections 168 and 169, in January of each year after the year of registration, an exempted company files a declaration with the Registrar: its memorandum of association has not changed apart from changes already notified, the nature of its business is stated, and its operations were carried on mainly outside the jurisdiction. The annual fee is paid with the declaration. Late filing incurs a penalty: 33.33% of the fee if filed between April 1 and June 30, 66.67% between July 1 and September 30, and 100% between October 1 and December 31. A company that has not filed the declaration or paid the fee is treated as a defunct company after a month’s notice from the Registrar.

Under section 174, an exempted company may do business in the jurisdiction only in furtherance of its business outside it: it may conclude contracts there and exercise its powers for that purpose. Trading with local clients requires a licence, after which the company operates as an ordinary resident company.

If the structure raises investors’ money as a private fund, the Private Funds Act (2025 Revision) requires it to apply for registration with CIMA within 21 days after accepting investors’ capital commitments, to pay an annual registration fee and to accept capital contributions only after registration. We prepare the fund, administrator and auditor documents before the first capital is raised.

Economic substance: which activities are covered

The International Tax Co-operation (Economic Substance) Act applies to companies, LLCs and LLPs of the islands, as well as foreign companies registered there, if they carry on one of nine relevant activities:

• banking business;
• distribution and service centre business for the group;
• finance and leasing business;
• fund management business;
• headquarters business;
• insurance business;
• intellectual property business;
• shipping business;
• holding company business.

Investment funds and tax residents of other countries are excluded from the definition of a relevant entity. For a pure equity holding company, which only holds shares and receives dividends and gains on their sale, the law provides a reduced test: the company confirms that it has met all its filing obligations under the Companies Act and has adequate staff and premises on the islands for holding its shares. In practice these functions are covered by the licensed registered office provider.

Every year the company tells the Tax Information Authority whether it carries on such an activity, whether the income from it is taxed in another country and when its financial year ends. If the test applies, the economic substance return is filed no later than 12 months after the end of the financial year. Under the 2020 version of the law, failing the test costs CI$10,000, and failing it again the following year another CI$100,000 plus a report to the Registrar, after which a court may strike the company off. The consolidated 2026 revision was published in the official Gazette in February 2026, and we check the amounts against it on the filing date. The general principles of the regime are covered in our guide Economic substance: who needs a local presence.

Beneficial owners (UBO)

The Beneficial Ownership Transparency Act, 2023 came into force on July 31, 2024 by order of the Cabinet (Commencement Order, supplement to Legislation Gazette No. 26). It is the law on disclosing the ultimate owners (beneficial ownership). In practice a provider starts work only after the beneficial owners have been disclosed and verified, so an anonymous structure cannot be set up here in 2026. How beneficial ownership disclosure works in different countries and what banks ask for is described in our guide on beneficial owners (UBO).

Bank account

Cayman Islands investment structures usually work through custodians, brokers and fund administrators. A trader making daily payments will find a bank harder to come by. The bank checks the beneficial owners, the ownership structure, the purpose of the account and the expected transactions, and the decision is the bank’s alone. We handle preparation for this review as part of our bank account for an offshore company service.

The owner’s taxes and CFC rules

Zero local taxes apply to the company itself. The owner pays tax under the rules of their own country: many states tax the undistributed profits of controlled foreign companies (CFCs). We wrote about the exchange of account information under the CRS standard in our article on CRS in 2026. We run the calculation for your country of residence before incorporation. How controlled foreign company rules work is covered in our guide on CFC rules.

The Cayman Islands are on the list of states (territories) approved by Ukraine’s Cabinet of Ministers for transfer pricing: Resolution No. 1045 of December 27, 2017, with the annex as amended by Resolution No. 1505 of December 27, 2024. For a Ukrainian company, transactions with a Cayman Islands company are controlled transactions under Article 39 of the Tax Code of Ukraine when the Ukrainian company’s annual income exceeds UAH 150 million and the volume of transactions with that counterparty exceeds UAH 10 million a year. If a Ukrainian resident owns the company and it qualifies as their CFC (Article 39-2 of the same code), its transactions with non-residents from this list are disclosed in the CFC report, and the related income and expenses are measured at arm’s length when the adjusted profit is calculated.

Timelines and cost

The timeline and budget for Cayman Islands company formation depend on the form (exempted company, fund or SPV), the provider and the checks on the people involved, so we give figures after the questionnaire. The calculation covers registry fees, provider and registered office services, bookkeeping and, for a fund, administration and audit. The full two-year cost of ownership is broken down in our guide how much an offshore company costs.

The Cayman Islands, the BVI or The Bahamas

The choice between island jurisdictions usually comes down to the investor profile. The Cayman Islands are the familiar home for funds: CIMA supervises mutual and private funds as a separate sector, and the market’s administrators, auditors and lawyers deal with such structures every day. For a holding company without outside investors this infrastructure is often more than needed, and for that case we usually suggest the BVI, where the annual fee, reporting and beneficial ownership requirements work differently.

We compare The Bahamas on the same lines: legal form, agent, annual obligations, beneficial owners, substance and bank. The terms are collected in our page on company registration in The Bahamas. For the holding company of an international group we add the criteria from our guide on the international holding company: the owners’ country, double tax treaties, withholding tax on dividends and the reduced substance test for holding company business.

Shelf offshore companies in the Cayman Islands

A request to “buy a shelf offshore company in the Cayman Islands” usually means the client wants to start sooner. If a provider has an available incorporated company, it is transferred to the new owner through a change of shareholders and directors, with a full check of the buyer. The procedure is described on our shelf offshore companies page.

Frequently asked questions