The tiny Caribbean archipelago of the Cayman Islands imposes no direct taxation on its residents. As a result it has become a haven for offshore banking and boasts one of the wealthiest populations in the world which enjoy an envious standard of living.
The Cayman Islands are situated in the Caribbean, directly south of Cuba and north-west of Jamaica. The capital of this British Overseas Territory is George Town, located on Grand Cayman; the largest of the three islands and the one which houses the majority of the 48,000 Caymanians.
The Cayman Islands first came to the attention of Europe in 1503 when visited by Christopher Columbus, who immediately christened them ‘Las Tortugas’ due to the abundance of sea turtles found there. But, it wasn’t until 1586 that an Englishman, Sir Francis Drake first paid a visit to the Islands and they became the Caymans. Upon visiting the island idyll archipelago he promptly re-named them, again after an animal but this time the creature of choice was the indigenous Cayman crocodile.
Despite being a British Overseas Territory its proximity to the USA has led to the development of extensive trading links between the two. Indeed, reflecting the importance of the USA to the Caymans its local currency is fixed against the USA dollar at the rate of one Cayman dollar to 1.25 US dollars.
One of the major contributors to the Cayman Islands’ economy is offshore banking. Although offshore bank accounts are available in a large number of countries throughout the world, it is the beauty and climate of the Cayman Islands combined with its lack of direct taxation and closeness to the USA that persuades a significant number of wealthy individuals to invest their money in the territory.
Indeed, finance is incredibly important to the Territory largely as a result of its lack of direct taxation. Despite having a population of less than 50,000 there are at last count over 68,000 companies registered in the country, including over 500 banks. The islands even boast their own stock exchange which was opened in 1997. Aside from the massive financial earnings it is tourism that contributes most to the Cayman Islands economy, with over two million visitors, the majority from North America, making the journey to the islands every year and accounting for 70% of the Gross Domestic Product of the Islands.
Tourism in the Islands operates at the top end of the luxury market reflecting the wealth that is evident throughout the Cayman Islands and also the type of visitor it attracts. Despite its relatively small size the Cayman Islands are an important financial hub in the Caribbean.