With their stunning landscapes and favourable business climates, the Caribbean islands of the Cayman Islands and the British Virgin Islands (BVI) are popular among entrepreneurs globally. We delve into the specifics to assess which destination might be the ideal fit for establishing an offshore business, with a particular focus on the advantages offered by the Cayman Islands.
Cayman Islands vs. BVI: Offshore Business Showdown
|
Criteria |
Cayman Islands (CEC) |
British Virgin Islands (BVI) |
|
Time to set up a business |
4-6 weeks for comprehensive support from CEC, ensuring seamless integration with local government requirements and no hassle for business owners |
Up to 3 months (about a week for basic registration with additional time required for compliance, banking, and other local legislative navigation) |
|
Cost to establish a physical presence |
Starts at USD $14,750, inclusive of office space, utilities, and comprehensive support services provided by CEC |
Approx. USD $1,000 - $1,500 for basic incorporation; additional costs for office space, compliance, and other necessary services must be managed independently |
|
IP Considerations |
British Common Law |
British Common Law |
|
Legal Considerations |
100% foreign ownership allowed; regulated under UK Overseas Law |
100% foreign ownership allowed; regulated under UK Overseas Law |
|
Ease of doing business |
Ranked least complex jurisdiction in the world; efficient setup process |
Straightforward business setup with minimal requirements |
|
Ease of travel |
Flights to 29 destinations including a direct flight to Los Angeles. Served by 10 airlines. |
Flights to 15 destinations with connections to the US, UK, and other Caribbean islands. |
|
Population |
65,483; diverse international presence |
30,231; close-knit community |
|
Business community dynamics |
Friendly community, regular networking events, diverse international presence, pro-business government policies |
Active business community, strong networking opportunities, pro-business government policies |
|
Lifestyle |
Cosmopolitan Island-Lifestyle; high standard of living, education, healthcare |
Relaxed island lifestyle, high quality of living, excellent healthcare and education systems |
|
Cost of Living Index |
High; however offset by tax benefits |
Moderate; some tax incentives available |
Taxation
The Cayman Islands offer a tax-free haven with no corporate, capital gains, or sales taxes, making it an appealing destination for fiscal efficiency. Conversely, the BVI attracts businesses with its zero corporate tax rates and absence of capital gains tax, complemented by a straightforward regulatory framework.
|
Tax Type |
Cayman Islands (CEC) |
British Virgin Islands (BVI) |
|
Corporate Tax |
0% |
0% |
|
Personal Income Tax |
0% |
0% |
|
Capital Gains Tax |
0% |
0% |
|
Sales Tax/VAT |
0% |
0% |
|
Withholding Tax |
0% |
0% on dividends |
|
Double Taxation Treaties |
None; uses Tax Information Exchange Agreements (TIEA) |
Limited network; uses Tax Information Exchange Agreements (TIEA) |
Time to Set Up a Business
While the initial company registration in the BVI can be completed within 3-6 business days, establishing a fully functional business takes significantly longer. Opening a bank account, which is crucial for business operations, can take up to three months due to strict banking regulations and KYC requirements. Additionally, securing necessary licences for certain business activities, such as financial services, can take 4-6 weeks. In contrast, Cayman Enterprise City (CEC) offers a comprehensive, white-glove service that integrates seamlessly with local government processes, ensuring that all aspects of your business are operational within 4-6 weeks, including company registration, office space, and banking setup.
Cost to Establish a Physical Presence
Operating a business in the BVI can involve hidden costs that are not immediately apparent during the initial setup. For example, economic substance regulations require a physical office and local staff, which can add an estimated $5,000 per month in costs. Additionally, office rentals, utility costs, and expatriate staff expenses are significantly higher than in other jurisdictions. Navigating these requirements independently can be burdensome and time-consuming. In contrast, CEC in the Cayman Islands provides an all-inclusive package that covers these needs, reducing the risk of unexpected expenses and administrative burdens.
Intellectual Property and Legal Framework
Both jurisdictions uphold British Common Law, ensuring robust protection for your business's intellectual property. They both permit 100% foreign ownership with Cayman Islands' law adding familiarity for those used to British legal systems.
Ease of Doing Business
The BVI's stringent economic substance regulations, introduced in recent years, have added layers of bureaucracy, making it harder for businesses to comply without extensive local knowledge. Non-compliance can lead to fines or even the liquidation of the business. CEC's integrated approach in the Cayman Islands ensures that all regulatory requirements are met efficiently, with minimal hassle for business owners.
Ease of Travel
The Cayman Islands are noted for their exceptional connectivity to major American cities, providing a significant advantage for businesses with international operations. The BVI also offers good connectivity, but with fewer direct flights and destinations.
Island Demographics and Business Community Dynamics
The Cayman Islands, with over 65,483 residents, feature a global mix of over 130 nationalities, enriching a vibrant business community ideal for international networking and enterprises. The BVI, with a smaller population of 30,231, offers a close-knit community with strong networking opportunities but less diversity.
Special Economic Zones and Investment Incentives
The Cayman Islands stand out with Special Economic Zones (SEZs) offering significant tax relief and operational benefits, providing a unique advantage not available in the BVI. The BVI offers robust incentives under the Business Companies Act but lacks the specialised benefits of SEZs.
Lifestyle
In the Cayman Islands, residents enjoy a luxurious lifestyle complete with top-tier amenities, healthcare, education, and leisure activities like beach outings and water sports. The BVI offers a relaxed island lifestyle with excellent healthcare and education, but may not match the cosmopolitan flair of the Cayman Islands.
Safety and Stability
The Cayman Islands are celebrated for their safety and low crime rates, bolstered by proactive anti-corruption measures, making it a secure environment for business and living. The BVI maintains a generally safe environment, with crime mostly limited to minor incidents, and a proactive governance approach.
While both jurisdictions are generally safe, the Cayman Islands offer a higher level of political and economic stability, supported by a strong regulatory framework that is investor-friendly and transparent. The BVI, on the other hand, has faced increasing regulatory scrutiny and changes that may pose risks or require businesses to adapt quickly to new compliance demands.
Cost of Living
Both destinations face high living costs. The Cayman Islands offset these costs with no direct taxes such as income or sales taxes, offering significant long-term financial benefits. The BVI, featuring a lower cost of living index, also offers attractive tax incentives, making it appealing for initial setup.
While the BVI may seem appealing for quick business registration, the hidden costs, regulatory challenges, and complexities of maintaining operations can outweigh the initial benefits. In contrast, the Cayman Islands, through CEC, provide a more predictable, supportive, and streamlined environment for businesses, ensuring long-term success with minimal hassle. For those seeking an efficient and secure business setup, the Cayman Islands clearly stand out as the superior choice.
Ready to Set Sail?
Discover the unique benefits of Cayman Enterprise City. With world-class facilities and a dynamic business community, the Cayman Islands not only promise significant business growth but also an unparalleled quality of life. Join us and elevate your business within our Special Economic Zones.