Benjamin Franklin said that there are two things in life, death and taxes. But for some rich people who are already rich and free, the joy of life lies in how to reasonably bypass the law and find a perfect way to pay less taxes or even avoid taxes, besides investing a lot of money in pursuit of eternal life.
The "tax haven" represented by Cayman Islands is an indispensable part of this perfect approach. In this place, the government does not levy any direct taxes, and corporate profits, capital gains and personal income do not need to be taxed. As long as you simply fill in the registration information, you can register a company, and you don't need an office or even an employee who actually stays here. These companies nominally located in the Cayman Islands can control entities thousands of miles away, thus legally avoiding taxes.
The temptation of "what you earn is what you get" and "less tax = more money" has made the Cayman Islands the best company registration place in the world, and the name of "tax haven" has followed. However, since ancient times, taxes have been an important source of national fiscal revenue and a sharp weapon to adjust the gap between the rich and the poor. When the wealth that should have been redistributed slips away along the wall of the law, for whom is the door of "heaven" opened?
Who created the "tax haven"
Looking back along the development of offshore finance in Cayman Islands, we can vaguely see the figure of the US dollar shuttling through it, which was a helpless self-help of a colony without even autonomy under the background of the decline of Britain and the rise of the United States.
After World War II, Europe's economy fell into depression for several years. Most of the former industrial cities were in ruins, with high unemployment rate and stagnant agricultural production. The war emptied the treasuries of most countries, and even the money for rebuilding transportation facilities could not be taken out. Coupled with the barrier of the Iron Curtain of the Cold War, the food trade between East and West Europe was almost completely interrupted, and millions of refugees could only live in temporary camps and rely on a little relief food.
The scenes of the United States and Europe are completely different. The excellent geographical location and the opportunity to participate in the war have limited the impact on the United States, but it has become more prosperous because of the war economy. In order to contain the Soviet Union and open up new markets, the United States decided to systematically provide economic assistance to European countries. This plan, which is centered on political purposes and wrapped in a thick layer of dollar sugar, is called Marshall Plan.
Marshall Plan made a large amount of dollars flow into western Europe, especially Britain, and got up to 26% of the aid funds. At the same time, under the pressure of the Cold War, the dollar foreign exchange of eastern European countries was also transferred to banks in western European countries. In the 195s, influenced by the pound crisis and American onshore financial regulation, a large amount of US dollars continued to flow into Europe, and "Eurodollar" began to take shape in Western Europe, and London began to vigorously develop its financial industry.
However, this can't stop the decline of British national strength.
In the 196s, British colonies became independent one after another. Jamaica, which is far away from the Caribbean, declared its independence in 1962, and its affiliated Cayman Islands came under the direct jurisdiction of Britain. However, what can Britain do for the Cayman Islands? In 1972, Britain decided to devolve more autonomy. In other words, let the Cayman Islands make a living independently.
The Cayman Islands, a place with an area of only 264 square kilometers, can only get its hands on fishery resources. Since Columbus discovered this uninhabited island in 153, it has always existed as a colony. Without the support of the sovereign state, the Cayman Islands can only rely on the sky for food.
In desperation, the Cayman Islands began to imitate London, trying to get a slice of offshore finance. However, the Cayman Islands does not have any financial industry foundation, so how can it attract transnational capital injection? Caymanian officials racked their brains and finally thought of starting with taxation. Through legislation, the Cayman Islands has created an extremely relaxed business environment. It does not levy any direct taxes on companies and individuals, and even does not need the company to actually operate in Cayman. It only needs to pay a little money and leave a mailbox to register a company located in Cayman. In order to compete with other offshore financial markets, the Cayman Islands has also drawn lessons from Swiss banks and set up strict confidentiality measures to protect the detailed information of registered enterprises.
The policy of zero tax is tantamount to plating a layer of gold on the Cayman Islands. There is no need for any publicity. Naturally, companies come all the way with banknotes to register. In just a few years, the Cayman Islands has attracted thousands of registered companies and trust funds, and even Citibank can't help but register on the island.
For other countries and regions, hundreds of years of colonial history is a shame, but for this region that has never been independent in history, colonization has shaped its culture, laws and even ways of making a living-English-speaking countries, Anglo-American systems and economies depend entirely on big countries, and there is no place like this to reassure Anglo-American multinational companies.
driven by globalization, the number of multinational enterprises has increased sharply, and the Cayman Islands has become a world-renowned offshore financial center. However, people prefer to call it a "tax haven" more directly than this elegant economic term.
Who holds the "tax haven" ticket
On April 2, 22, Luckin Coffee exposed himself to financial fraud at the US Securities and Exchange Commission, amounting to 2.2 billion yuan. On hearing of this, Ruixun's share price collapsed, and it was suspended and delisted on June 29. On July 15th, the Grand Court of Cayman appointed Alexander Lawson and Wing Sze Tiffany Wong as joint liquidators to promote the debt negotiation and restructuring of Ruixun.
being registered in Cayman, being listed in the United States and actually operating in China is not the initiative of Luckin Coffee, but the choice of many Internet companies.
in 1999, Sina planned to go public overseas. However, according to the 1993 law prohibiting foreign businessmen from intervening in telecom operation and telecom value-added services, the Ministry of Information Industry believes that foreign businessmen can not provide network information services (ICP), but can provide technical services. This is equivalent to encouraging enterprises to carry out overseas financing. Following this idea, Sina spun off ICP business and did not participate in the listing, and the rest was reorganized to open a holding company in Cayman Islands as the main body of listing. As a result, Sina met the laws of China and the United States at the same time, and successfully listed on NASDAQ in 2.
this mode is called "Sina mode".
In the following years, Internet companies such as Netease, Sohu, KongZhong, Shanda, Baidu, Focus Media, Tencent, Alibaba, etc. borrowed from the Sina model and landed in overseas capital markets one after another. Behind these popular Chinese stocks, there was a holding company registered in Cayman. On October 1th, 23, Netease's share price rose to an all-time high of $7.27, and Ding Lei became the richest man in Chinese mainland by virtue of his shares. Only seven months later, Shanda Network went public, surpassing the market value of Korean online game company NCSOFT in one fell swoop, becoming the world's highest online game stock with market value, so Chen Tianqiao squeezed out of Ding Lei and became the new richest man in China.
With the development of the Internet in China, similar stories of making wealth emerge one after another. By the end of December 211, the number of Internet users in China had reached 513 million, making it the country with the largest number of Internet users in the world. Soon, the wave of mobile Internet roared, and a new round of "Cayman Holdings-Overseas Listing" was launched.
and these are only a tiny part of the huge capital vortex rolled up by more than 1, registered companies in Cayman Islands.
From the day it became an offshore financial center, the fate of the Cayman Islands was closely related to the US dollar.
According to statistics, 9% of companies registered in Cayman Islands are closely related to the financial market in New York, which is 2,574 kilometers away-either they want to rush into the capital market through Cayman Holding Company or they want to set up a Cayman subsidiary to adjust their accounting statements and avoid taxes skillfully. Of course, under the premise that the dollar is still the world currency, affecting the financial market in New York is equivalent to affecting the whole world.
in 197s, economist milton friedman put forward "shareholder capitalism". He believed that when shareholders became the main body of power in enterprises, it became the highest purpose of enterprise operation to find ways to raise stock prices and increase shareholders' income. In order to achieve this goal, professional managers are often promised equity rewards and become another form of shareholders. In this way, as long as the company's statements look good, it can strongly push up the stock price. It is conceivable that tax avoidance is also an important means to reduce costs and boost profits.
when Friedman put forward this view, it happened to be the beginning of the development of Cayman Islands and other offshore financial centers around the world. After several decades, the offshore financial prosperity in Cayman Islands is better than before, and his view is still constantly proved.
In 218, Tesla suffered a huge loss of $1 billion, but at the same time, Musk, as CEO, earned $2.284 billion in the form of stock options, which was 4,668 times the average salary of Tesla employees.
Apple has always shaped its corporate image with environmental protection. However, in order to avoid corporate tax in the United States, Apple chose Ireland, which is similar to Cayman Islands, to set up a subsidiary, and transferred all intellectual property rights to Ireland, so as to avoid taxes skillfully through account operation. When it was disclosed in 217, Apple already had $252 billion in offshore cash. This year, Cook received an annual salary of $145 million, which is 27 times the average annual salary of Apple employees.
Pushing up the stock price and grabbing wealth, playing the same game as one world, the Cayman Islands firmly connects the global market like a hidden button. After all, regardless of nationality, capital always has the most sensitive sense of smell.
people living in "tax havens"
So, how are people living in this "tax haven" that global enterprises are flocking to?
Like most tropical islands, sunny coconut groves, clear water and clean sand are the standard of Cayman Islands. On Grand Cayman, the main island, there is the most beautiful beach in the whole Caribbean-Seven Mile Beach, which used to be seven miles long, but the actual length has been shortened to six miles due to the rising sea level.
According to the laws of Cayman Islands, this beach is public property. However, locals know that luxury resorts and luxury hotels have been built not far from the beach, and their area is expanding. This seems to be a cruel metaphor: in Cayman, there is always some confrontation between the public interest and the interests of foreign capital.
The population of Cayman Islands is about 65,7, including more than 1 nationalities, and 9% of them use English. The per capita GDP is about 56, US dollars, ranking first in the Caribbean. Due to the huge offshore financial system, more than 1, companies are registered in the Cayman Islands, and the number of companies is more than the population.
There is no real industry, and there are no available natural resources. Most registered companies are "paper companies" and cannot contribute a little income. How can the Cayman Islands support such a high GDP?
the answer is indirect tax. In Cayman, the reputation of "tax haven" is only for paper companies. Although there are no direct taxes such as personal income tax, capital gains tax and corporate income tax, there are quite high indirect taxes. For example, there is almost no physical industry in the Cayman Islands, and most materials are imported. Every commodity will be subject to import tax of 5%-22%, and even as high as 1% for pure imported goods such as automobiles.
This is only a fraction of the cost of living in the Cayman Islands. Here, dual-income families want to find a nursery for their children before work, even the cheapest one will cost $6, a year. Broadband service is essential in the information age, but the broadband fee in Cayman is the highest in the world, which costs $14 per month. If you rent a house, a simple one-bedroom apartment costs $2, a month. Want to buy a house in Cayman? In 22, the average house price is close to $1 million.
By September, 22, the residents of Cayman Islands had accumulated more than $5 million in education loans, $7 million in automobile loans and $2.2 billion in real estate loans, and the national household debt accounted for 41% of the Cayman Islands' GDP. On the surface, this figure seems to be much lower than that of Britain and the United States. However, if the huge wealth of immigrants is counted, the pressure on the real Caymanians will be much greater than the data shows.
After all, this is an area where the legal minimum hourly wage is $6, while in Britain, where the cost of living is lower, the figure is ￡ 1.5 (about $14.4).
Taxation is like blood, which maintains the normal operation of a region. How can it disappear completely? The beauty that "tax havens" show to foreign enterprises is all based on the high cost of living of local residents. Sadly, when the Cayman Islands lost British support in the 197s, there was no second way.
all this seems to be a gift from the times, but in fact, the price has already been secretly marked.
To some extent, the Cayman Islands can be regarded as a miniature landscape of the gap between the rich and the poor in contemporary society-
A few steps away from the seven-mile beach, the rich enjoy the most beautiful scenery and live in the most luxurious resorts and hotels in the world. The luxury cruise ships of Microsoft co-founder paul allen and sports star Tiger Woods have all stayed on the coast of the Cayman Islands for a long time, and well-known companies that have changed the world, such as Google, Apple, Procter & Gamble and Coca-Cola, have also registered their companies here.
However, walking to the north of Seven Mile Beach, there are locals who have endured the high cost of living for a long time. It is difficult for them to save any savings for their children, cars and houses. Abnormal taxes and industries make it difficult for the Cayman Islands to fully pay the pension for the elderly. For many Caymanians, to maintain their pre-retirement life, they have to work hard until they are 8 years old.
In the Cayman Islands, the number of newly registered companies is more than the newborn population every year. However, these companies only regard this place as a transit station or a treasure trove, and they never want to take root here. Few people think that there used to be a lot of turtles here, some people called it "Turtle Island", and crocodiles often appeared, so it was officially named "Cayman". Nowadays, the number of turtles and crocodiles has been greatly reduced, and Cayman has been simplified into a word full of money, which has repeatedly appeared in various documents of multinational companies.
People always refer to the Cayman Islands, the Virgin Islands, Bermuda, Jersey and other low-tax or zero-tax areas as "tax havens", but forget that in this highly capitalized world, the door to "paradise" is never open to most people.