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Comment by theRealMe | Hacker News Reader

You might not like it, but the Caymans are absolutely known as a tax haven. You can’t really be arguing that people stash money in the Caymans “because of the transparency”…

“The Cayman Islands are considered a tax haven because the Caymans do not impose a corporate tax, making it an ideal place for multinational corporations to base subsidiary entities to shield some or all of their incomes from taxation. The Cayman Islands do not impose taxes on residents. They have no income tax, no property taxes, no capital gains taxes, no payroll taxes, and no withholding tax.”

https://www.investopedia.com/ask/answers/100215/why-cayman-i....

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By the way, Cayman has pretty substantial taxes. We operate a thriving country with no national debt and a great social safety net.

We just charge them differently. There’s an effective 22% consumption tax (with carve-outs for basics), levied on all imports and increased on luxuries. We have 7% taxes on all property transfers (for both income and to minimize house flipping). We have a ton of fees on any government interaction which aligns regulatory burdens with income.

I think you two are using different definitions of "tax haven".

You're using it (and your source) as "low or minimal taxes" are levied against corporations and people in the Cayman islands.

The grandfather's definition is "a great place to hide your money so you don't have to pay the taxes you're supposed to pay".

I would normally define "tax haven" as the second.

Entities DO hide their money in tax havens to avoid paying taxes. They avoid paying taxes BECAUSE tax havens have low or no taxes. Those two definitions are defining two ends to the same thing. The caymans have low or minimal taxes. The caymans are also used by entities to hide their money so they don’t have to pay taxes. Entities are not incorporating in the Caymans for any reason other than avoiding taxes. And the actual definition of a tax haven specifically is “a country or independent area where taxes are levied at a low rate.”

True, but if you're looking to hide your money you want two things: 1) low taxes within the country and 2) low transparency as to who owns what in the country.

That's why Switzerland used to be a great place to hide your money decades ago - low taxes and numbered accounts where it was illegal to reveal the true identify of the account holder.

Based on DelaneyM's comment - Caymans has the 1st but not the 2nd.

it seems the topic is havening the money, not "hiding" it, so 2) isn't necessary

My point is that the ability of a company to put money offshore for tax benefits is on the home/operating country, not the offshore location.

Cayman invests a lot of energy in sensible and globally integrated financial regulations. We specialize on that as a country. So when companies are moving money around globally we often feature in that. But we can’t be held responsible for what those funds transfers are used for.

We can be transparent (and we are exceptionally so), we can be responsive to global financial crimes queries (we are that as well). But what are we supposed to do about another country’s laws?

the home country is the Cayman islands, the operating country may be different, and either way, the motivation and ability to use the Cayman Islands as a tax haven derives from both countries

> Cayman invests a lot of energy in sensible and globally integrated financial regulations. We specialize on that as a country.

the reason the Cayman islands may have made all those investments is because that is what is expected of a mature tax haven

> we can’t be held responsible for what those funds transfers are used for

> what are we supposed to do about another country’s laws?

I mean, if you don't want to be a tax haven, you could raise taxes to be less favorable to businesses, but I'm not saying you should do anything, because this conversation is descriptive, not prescriptive

Companies are not putting money in Cayman to hide it.

Some companies put money outside of their operating or home country to minimize taxes, but Cayman has no part of that besides being “not their operating country”.

And it’s actually less often the tax treatment of funds which brings companies to Cayman, and much more often the simpler regulations. Operating globally often means a geometric growth in financial complexity. Cayman is a neutral third country, which simplifies things tremendously. Think of us like a financial cache.

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