In the James Bond movie Quantum of Solace, the evil Quantum Group (contracted by greedy corporations) was credited with overthrowing the government of Haiti.
The plot “the Government has raised the minimum wage from 38 cents to $1 a day effectively reducing the corporate’s profits”. Greedy international corporations protecting their sweatshop manufacturing in Haiti does sound like a plausible plot. In reality it is more likely that international corporations in the Caribbean would employ highly paid attorneys and bankers rather than sweat shop workers.
In real life the Quantum Group and their corporate clients would have incorporated in a Caribbean country where they would enjoy substantial tax benefits and privacy. They would be heavily invested in maintaining the status quo and a stable government.
Consider some interesting facts in relation to the Caribbean;
- Land area: 259 square kms
- Population: 60,000
- 325 Licensed Banks and Trust Companies
- 47 of the 50 largest banks are represented
- Greater than US1.5 Trillion Assets under management
- More than 90,000 Registered Companies
Clearly in the Caribbean Financial Services is a far larger industry than Clothing Production.
In my opinion the potential for businesses of any size to take advantage of the beneficial tax and privacy environment in the Caribbean is far more exciting and lucrative than any Bond Movie (and I’m a fan).
Recent media reports show that the new James Bond movie “Spectre” is massively over budget. To lower production cost, the studio and producers have restarted negotiations with the countries to have the film subsidies and tax credits increased. News reports state that the producers were asking Mexico for millions in additional subsidies and credits due to the large amount of filming in the country.
Ironically if the intellectual property rights of previous films were owned in a tax efficient jurisdiction like the Cayman Islands, the films producers would have easy access to secure additional funding due to the maximization of tax savings within the companies accounts. This results in a REAL positive cash-flow advantage.
The strategy of reinvesting tax savings to fund future production is a very powerful method of accelerating wealth generation. Unlocking the power of international ownership of intellectual property is critical to this process.
The reason so many global companies choose the Cayman Islands for their corporate structures is that the government has chosen to offer companies’ attractive terms of incorporating in the country and have historically been politically very stable. The country is also in full compliance of international tax and transparency standards to the point that it has the preferred status of being “white listed” by the Organization of Economic Cooperation and Development.
- Cayman Islands exempted companies are tax-free for 20 years by law.
- Distributions from Cayman Islands companies to shareholders are tax-free.
- There is no need for the directors to file accounts, or for the firms to be audited annually.
- Shares can be registered to an individual or a company.
- The country enjoys very strong privacy laws. It is a criminal offense to disclose confidential information in regards to Cayman companies.
- The Caymans enjoy a very stable common law legal system that is heavily influenced by current English Law.
- The country is politically very stable while also enjoying the benefits of being a British Overseas Territory.
- A company can be registered in 24 hours with low corporate registration fees.
- The country operates an online registry which allows users access to their company information and associated documents
- Patents recorded in the Cayman Islands effectively enjoy UK equivalent patent protections.
Historically developing and implementing Tax and Asset Security efficient corporations has been perceived as the domain of large international corporates.
Like the plot of “Quantum Of Solace” this is fiction and based on flawed assumptions.
The reality in the current global market is that these advantages are available to many businesses and individuals and can be implemented in a manner that achieves a serious return on investment.
Many businesses and individuals act and operate globally and should be structured to reflect this. However it is crucial to remember that the structure implemented is not a template. It must be a solution tailored to meet the specific circumstances and objectives of each individual or corporation.
The benefits of efficient global structures in terms of after tax profit, cash management, asset security and privacy are available to all and I believe taking maximum advantage of these benefits is the right of all and the responsibility of all directors, officers and managers.