The Cayman Islands rank 1st out of 217 in our world ranking, with a FiScore of 10 out of 10. That is the maximum, and it is literally accurate: there are no direct taxes at all.
Which leaves the only question worth asking: does that do anything for you?
What "no tax" actually means
Since the abolition of the annual head tax in 1985, Cayman levies:
- no income tax;
- no corporate tax;
- no capital gains tax;
- no inheritance or gift tax;
- no VAT or sales tax.
The territory funds itself through customs duties, company licence fees, tourism levies and property transfer stamp duty. This is not a trick. It is a complete fiscal model that has worked for forty years.
The thing most people have wrong
Cayman is not on the EU blacklist. The Council of the European Union's revised list of 17 February 2026 names American Samoa, Anguilla, Guam, Palau, Panama, Russia, the Turks and Caicos Islands, the US Virgin Islands, Vanuatu and Vietnam. Cayman is not among them.
It appeared briefly in 2020 and came off the same year after enacting its economic substance legislation. A lot of articles never updated that.
And yet it does not reduce your tax
Here is the part the companies selling offshore structures leave out.
A Cayman company does not reduce the tax of the person who controls it. If you are tax resident in a country with controlled foreign company rules, and every major developed economy has them, the profits of a Cayman entity you control can be attributed to you regardless of where it is registered. The structure moves the paperwork, not the liability.
Substance is no longer optional. The International Tax Co-operation (Economic Substance) Act requires entities carrying on defined relevant activities to demonstrate adequate economic presence in Cayman: people, expenditure, decisions taken locally. A shell does not pass, locally or at home.
Information is exchanged automatically. Your Cayman account is reported to your country of residence.
If you are American, this is the clearest case of all
The United States taxes its citizens on citizenship. A Cayman company, a Cayman account and a Cayman address change nothing about that, and because Cayman takes zero, there is no foreign tax credit whatsoever to offset your US bill.
For an American, moving to Cayman removes local tax you were never paying and leaves the US bill fully intact, minus the foreign earned income exclusion on earned income. Renunciation is the only thing that changes the equation, and it has its own price, covered in how to actually leave.
So what is it genuinely for
Three things, and they are legitimate.
Investment funds. Cayman hosts a very large share of the world's funds because the law is solid, the case law predictable, and tax neutrality lets investors from twenty countries each be taxed at home without a second layer in between. This is the jurisdiction's real business.
Properly advised holding structures, with genuine substance and full disclosure in the country of residence.
Actually living there. A Cayman resident genuinely pays no income tax. Permits require local employment or significant investment, and the cost of living is among the highest in the world because almost everything is imported.
So, who is Cayman for?
- A fund or a properly advised structure: the reference jurisdiction, and that is not seriously disputed.
- Someone genuinely relocating: zero tax, at a very high cost of living.
- Someone wanting a company to pay less tax at home: no. This is the textbook case tax authorities look for.
- Someone comparing offshore reputations: Cayman is in better standing than Panama, which is currently blacklisted by the EU.
Before comparing jurisdictions, read how to actually leave. Residence decides, not the company register.
The full table is on our Cayman Islands page.
Sources
Rules and dates verified in August 2026 against the Cayman Islands Government, the Economic Substance Act and the Council of the European Union conclusions of 17 February 2026. An error reported to us gets fixed.
This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.