With the official announcement of the Xiaomi surging system (HyperOS), enthusiastic people found that the registered place of Xiaomi Group is the Cayman Islands, so many people said "why should Chinese enterprises register in the Cayman Islands, why not register in China" and "why pay taxes to other countries", the following analysis of where the Cayman Islands is, what is the offshore financial center, why there are many enterprises registered, and what is the impact on enterprises and countries.
Location of the Cayman Islands
The Cayman Islands is an enclave (overseas possession) under the jurisdiction of the United Kingdom, located in the Western Caribbean Islands of the Americas, consisting of three islands: Grand Cayman, Little Cayman and Cayman Brac.
It was discovered on 10 May 1503 during Columbus' Fourth Expedition and named the Cayman Islands by the English navigator Francis Drake. It became a British colony in 1670 and became a British colony in 1962.
Become an offshore financial center
The Cayman Islands has always had no income tax, capital gains tax, inheritance tax, export tax, share transfer tax, and so on. Therefore, many banks, trust institutions and companies in the world have come here, and tax havens have gradually formed. By 1972, more than 3,000 registered companies and more than 300 trust companies were registered in the Cayman Islands, including Scotiabank, National Bank of the United States and a number of private banks. The Cayman Islands thus became an offshore financial centre. (Offshore financial center means that the world's major banks and financial institutions have set up branches here, and companies can freely choose the currency to trade and operate.) ）
Why are there so many businesses registered
Because of the political stability of the Cayman Islands, tax incentives (only one business management tax, no other messy taxes), no financial regulation (you do not have to apply to the financial authorities for permission to operate multinational business, and you can carry it out freely). Especially for enterprises doing international business, after registering in the offshore financial center, the transaction of different currencies in various countries has become very convenient, and there is no need to run foreign exchange everywhere. It is also more convenient to list.
And there is also the point that a company registered in the Cayman Islands is not legally liable for any liability of the company owners and shareholders after bankruptcy or debt problems. This means that an individual's finances are not affected.
This also explains why Huawei pays 90 billion in taxes a year, and Xiaomi only pays 1.4 billion
What is the impact on the enterprise and the country
(1) For enterprises, as mentioned above, most of them are advantages, but some enterprises without overseas business are not necessary, after all, the management fee is not low.
(2) As far as the country is concerned, it does affect a lot of tax revenue, and as far as the mainland is concerned, tens of billions of yuan per year are also a big cake. In addition to the mainland, other countries also face the same situation, and Google is also registered in the Cayman Islands. So why didn't the state ban it (if it wanted to ban, it was a matter of paper), but the state did not do it.
On the one hand, it is necessary to give enterprises the freedom and rights to facilitate their global business.
On the other hand, although the company is registered in the Cayman Islands, its business has also become a global business, and as the volume of business increases, it will continue to expand the domestic factory, which brings tax revenue to the country and solves the employment problem of many people. In addition, after all, it is its own country's enterprise, and after becoming bigger and stronger, it is the embodiment of the country's comprehensive national strength and the country's right to speak. For example, in order to implement the US sanctions against Huawei, Google no longer allows Huawei to use GMS, destroying Huawei's overseas business at once, so powerful enterprises are still national weapons.
On the other hand, the state is also building its own tax preferential areas, such as Shenzhen Qianhai, Hainan Free Trade Port, Shanghai Free Trade Zone, etc., all of which have implemented a series of preferential tax measures, including the implementation of 15% enterprise income tax rate, the implementation of up to 15% personal income tax rate for individuals, zero tariff for cross-border trade, and so on.
Therefore, in summary, except for enterprises involving state secrets, the state will not have too many restrictions on enterprises, but will help enterprises become bigger and stronger as much as possible.