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Select a country and analyze the recent state of their fiscal policy - Research Paper Example

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The Cayman Islands The Cayman Islands is a small Caribbean country that entices the world’s millionaire’s club with its dreamy reefs and beaches and investment-friendly government policies. It definitely is not a surprise that tourism and financial services are the backbones of its stable economy…
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Select a country and analyze the recent state of their fiscal policy
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Download file to see previous pages To ask which comes first is like asking the perennial question, “Which comes first, the chicken or the egg?” On the one hand, there is the leisure and pleasure travelers who come from around the world come to enjoy its pristine beaches and breathtaking coral reefs. Then while there, they make a little side trip to the business center to open an offshore bank account, invest in the stock market or buy the nice lot they have spotted while trekking. On the other hand, there are the business people on their nth business trip to the Caribbean islands to have their corporation or business registered. They are also there to buy stocks, invest in trust and mutual funds, or open an offshore bank account. And while waiting for their business to get processed, they check-in into a resort and go scuba diving on one of the island’s amazing reefs. Aside from its natural wonders, the government of this three-island country lures investors with its zero direct taxes. Yes, you heard it right. The 57,000 Caymanians pay no direct taxes to the government. There is no tax on income, donation, and inheritance. Capital gains tax and corporate taxes are also unheard of in this Caribbean haven. Finally, there are no property taxes in Cayman Islands. At most the government collects a six percent to seven and a half percent (6% to 7.5%) stamp duty for the sale of real property, which is based on its value at the time of sale. There is also a one percent to one and a half percent (1% to 1.5%) fee that is collected for mortgages of real property (Cayman Islands Government FAQ). Simply put, for the Caymanians, it means that there is no need to declare your income, what your properties are, or any other assets for that matter (Cayman Islands Chamber of Commerce). The government does not collect data how much you earn, how much you spend or how much you owe. The government is not interested to know how you earned your wealth. They don’t care if you worked for it, inherited it or received it as a gift. For the foreigners, zero direct taxes means there are no restrictions on land ownership. Foreigners can purchase land for as much as they can afford. There are no limits on investment opportunities. The government does not want to know what you invested into and how much money you put in a certain business. Foreigners can open as many bank accounts as they like. As a matter of fact, if you show up in person and present yourself for interview by the bank, you only need to present your passport to open an account. No certification of identification is necessary (Investing in Cayman) As a matter of fact, this zero direct tax system is the country’s major selling point to investors who are always on the lookout for better terms for their money. The primary industry of financial services, together with its allied professional services industry which includes lawyers, bankers, accountants, and financial advisors account for 55% of the country’s Gross Domestic Product (Teather 11). More specifically, this industry provides 12,500 jobs which is 36% of the employment rate of Cayman Islands. The 55% GDP actually account for 40% of the total revenue of the government. Finally, financial service is what brings in 30,000 visitors annually to the three islands of this Caribbean nation. I have focused my research and discussion on the zero direct tax rates in Cayman Islands because I ...Download file to see next pagesRead More
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