View Poll Results: How big does a Cayman Island Corporation have to be for US tax purposes?

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  • One employee in a little office.

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  • A real functioning place that does something, e.g. processing orders or some paperwork.

    0 0%
  • Something bigger. Describe.

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Thread: How big does a Cayman Island Corporation have to be for US tax purposes?

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    Professor

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    How big does a Cayman Island Corporation have to be for US tax purposes?

    How big does a Cayman Island Corporation have to be for US tax purposes?
    1. One employee in a little office.
    2. A real functioning place that does something. Could be as little as processing orders or some paperwork.
    3. Something bigger. Describe.

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    Sage

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    I chose One Employee in a little office, that has always been my plan if I was ever to start a company.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by OhIsee.Then View Post
    How big does a Cayman Island Corporation have to be for US tax purposes?
    1. One employee in a little office.
    2. A real functioning place that does something. Could be as little as processing orders or some paperwork.
    3. Something bigger. Describe.
    What do you mean by for US tax purposes?

    .

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    What do you mean by for US tax purposes?

    .
    So it qualifies as a foreign corporation according to US tax law. And, so it qualifies as a Cayman Island corporation according to Cayman law.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by OhIsee.Then View Post
    So it qualifies as a foreign corporation according to US tax law. And, so it qualifies as a Cayman Island corporation according to Cayman law.
    Why should the USA have any say in determining the requirements for a valid company in other countries?

    We sell our products to a USA based company that distributes them in the USA. That company operates at close to break even so pays very little, if any, income tax.

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    Sage

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    Why should the USA have any say in determining the requirements for a valid company in other countries?

    We sell our products to a USA based company that distributes them in the USA. That company operates at close to break even so pays very little, if any, income tax.

    .
    Not making a profit, not for sure that is going to catch on as a tax evasion scheme.

    I think, not for sure, but I think what he is asking is your opinion on what the US government should recognize. For example if the "company" licensed in the Caymans only has an office and one employee but does a large amount of business through it's US devision, should the US government be going after them for Tax Evasion? Since basically, the company isn't real there.

    I don't know how many actually use that scheme, but frankly I like it. It allows a company to only be taxed on profits earned in the US instead of total profits as I understand it. Maybe a tax lawyer or corporate lawyer can give you more information.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    Why should the USA have any say in determining the requirements for a valid company in other countries? .
    Apparently it does. It's in our tax law. But the "WHY ..." question looks like it could be another poll.
    Quote Originally Posted by TOJ View Post
    We sell our products to a USA based company that distributes them in the USA. That company operates at close to break even so pays very little, if any, income tax.
    .
    That sounds like a way to move the profits to a place where the taxes are lower or zero. Is it?
    Last edited by OhIsee.Then; 08-31-12 at 12:54 PM.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    Why should the USA have any say in determining the requirements for a valid company in other countries? ....
    I might not have understood. The US doesn't " have any say in determining the requirements for a valid company in other countries"; it just has a say, and the obvious right to say, what the US will recognize as a valid company anywhere. For example in a US income tax ststement.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by OhIsee.Then View Post
    Apparently it does. It's in our tax law. But the "WHY ..." question lokks like it could be another poll.
    That sounds like a way to move the profits to a place where the taxes are lower or zero. Is it?
    If the same parent company owned both, then yes. But if one company sells to another and the second one just don't make much profit, then no. If you are breaking even, you don't pay much tax, but there is no profit to be moved either.

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by DVSentinel View Post
    If the same parent company owned both, then yes. But if one company sells to another and the second one just don't make much profit, then no. If you are breaking even, you don't pay much tax, but there is no profit to be moved either.
    But, what if the company that creates, e.g. manufactures, the product sells it to a Cayman Island division that invests in the product. Then the Cayman Island division marks it up just the right amount and sells it to the US division of the company. Then the US division sells it for the highest price it can making just a small profit. So then the Cayman Island makes almost all the profit. Anyway, how big would that Cayman Island division have to be if that was happening in the example you were giving us? Note, again the divisions are completly seperate companies by law, they just are owned by the same people at the top.

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