The Cayman Islands—a long time haven for many financial firms because of its lax tax codes—has recently made some news as a hub where presidential hopeful Mitt Romney has invested millions of his personal funds.
The area has long been known as an offshore financial center. As of 2008, there were over 10,000 hedge funds registered there.
So what's made these three Caribbean islands so popular among hedge funders? It's an eclectic mix of its policies and its culture.
Starting a hedge fund is easy and simple.
To set up a fund, most firms must register with the Cayman Islands Monetary Authority. But it only takes about 3 to 5 days to register with CIMA and get your fund set up.
There are also no laws limiting investment policy, issue of equity interests, prime brokers and custodians.
Source: Hedge Fund Law Blog
Amazing beaches
The Cayman Islands are known for their beautiful beaches, which have been cited as some of the best in Caribbean. The most famous among them is Seven-Mile Beach, located on Grand Cayman. The beach, which is actually only about 5.5 miles long, is just north of George Town, the capital of the Cayman Islands. The beaches are a popular recreation spot, and are light on restrictions—grilling and pets are allowed. Snorkeling is also a popular activity along the beaches because of the clear waters.
Need we say it? Tax Haven.
There is no income tax, corporation tax or capital gains tax in the Cayman Islands.
Individuals who get investment returns from funds in the Cayman, but may not live in the islands, are still subjected to taxation in their country of residence. But there are some loopholes—investments like pension funds and retirement funds may not be subject to any taxes even when retired to the individual investor—this is currently the issue being disputed with Mitt Romney as he vies for the Republican presidential nomination.
Source: Boston.com
See the rest of the story at Business Insider
Please follow Clusterstock on Twitter and Facebook.