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Consider the following statements regarding the Cayman Islands:
- It is a US overseas territory located in the Pacific Ocean.
- It is considered a tax haven because it does not impose a corporate tax.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding the Cayman Islands: It is ...
Cayman Islands’ recent exit from the FATF grey list is expected to bolster global private equity funds looking to invest in non-banking financial companies (NBFCs) based in India.
About Cayman Islands:
- The Cayman Islands is a British Overseas Territory located in the Western Caribbean Sea.
- The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica.
History:
- The Cayman Islands were colonized from Jamaica by the British during the 18th and 19th centuries and were administered by Jamaica after 1863.
- In 1959, the islands became a territory within the Federation of the West Indies.
- When the Federation dissolved in 1962, the Cayman Islands chose to remain a British dependency.
• Language: English is the predominant language, but many speak local Creole dialects.
• Geography: The geography of the Cayman Islands is low-lying with coral reefs.
• Capital: Its capital is George Town, which is located on Grand Cayman Island.
• Currency: The Cayman Island dollar is the official currency, but American money is widely accepted.
• Government: The government system is a parliamentary democracy; the chief of state is the queen of the United Kingdom, and the head of government is the premier.
Economy:
- The Cayman Islands have a mixed economic system, and the islands are a thriving offshore financial center.
- They 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.
- Without tax income, the Caymans earn revenue via fees related to tourism and work permits, financial transactions, and import duties.
Hence only statement 2 is correct.
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Community Answer
Consider the following statements regarding the Cayman Islands: It is ...
Explanation:
The correct answer is option 'B', which means only statement 2 is correct - "It is considered a tax haven because it does not impose a corporate tax." Let's analyze both statements in detail:
Statement 1: It is a US overseas territory located in the Pacific Ocean.
This statement is incorrect. The Cayman Islands is not a US overseas territory. It is a British Overseas Territory located in the Caribbean Sea, specifically in the western Caribbean Sea, south of Cuba and northwest of Jamaica. The three main islands that make up the territory are Grand Cayman, Cayman Brac, and Little Cayman. The capital city is George Town, located on Grand Cayman.
Statement 2: It is considered a tax haven because it does not impose a corporate tax.
This statement is correct. The Cayman Islands is widely regarded as a tax haven due to its tax policies. It does not impose a corporate tax, meaning that companies registered in the Cayman Islands do not have to pay taxes on their profits. This attracts many multinational corporations and wealthy individuals who seek to minimize their tax liabilities. The absence of corporate taxes is one of the main reasons why the Cayman Islands is known as a popular offshore financial center.
In addition to not having corporate taxes, the Cayman Islands also does not levy income taxes, capital gains taxes, or inheritance taxes. This makes it an attractive destination for individuals and businesses looking to legally reduce their tax burdens.
However, it is important to note that the label of a tax haven is often controversial, as it can be associated with practices that facilitate tax evasion and money laundering. The Cayman Islands has taken steps to enhance its regulatory framework and cooperate with international efforts to combat illicit financial activities.
In conclusion, only statement 2 is correct - the Cayman Islands is considered a tax haven because it does not impose a corporate tax. Statement 1 is incorrect - it is not a US overseas territory but a British Overseas Territory located in the Caribbean Sea.
The correct answer is option 'B', which means only statement 2 is correct - "It is considered a tax haven because it does not impose a corporate tax." Let's analyze both statements in detail:
Statement 1: It is a US overseas territory located in the Pacific Ocean.
This statement is incorrect. The Cayman Islands is not a US overseas territory. It is a British Overseas Territory located in the Caribbean Sea, specifically in the western Caribbean Sea, south of Cuba and northwest of Jamaica. The three main islands that make up the territory are Grand Cayman, Cayman Brac, and Little Cayman. The capital city is George Town, located on Grand Cayman.
Statement 2: It is considered a tax haven because it does not impose a corporate tax.
This statement is correct. The Cayman Islands is widely regarded as a tax haven due to its tax policies. It does not impose a corporate tax, meaning that companies registered in the Cayman Islands do not have to pay taxes on their profits. This attracts many multinational corporations and wealthy individuals who seek to minimize their tax liabilities. The absence of corporate taxes is one of the main reasons why the Cayman Islands is known as a popular offshore financial center.
In addition to not having corporate taxes, the Cayman Islands also does not levy income taxes, capital gains taxes, or inheritance taxes. This makes it an attractive destination for individuals and businesses looking to legally reduce their tax burdens.
However, it is important to note that the label of a tax haven is often controversial, as it can be associated with practices that facilitate tax evasion and money laundering. The Cayman Islands has taken steps to enhance its regulatory framework and cooperate with international efforts to combat illicit financial activities.
In conclusion, only statement 2 is correct - the Cayman Islands is considered a tax haven because it does not impose a corporate tax. Statement 1 is incorrect - it is not a US overseas territory but a British Overseas Territory located in the Caribbean Sea.
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Consider the following statements regarding the Cayman Islands: It is a US overseas territory located in the Pacific Ocean. It is considered a tax haven because it does not impose a corporate tax.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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