It’s not often that coming in last place is a good thing, but when it comes to the TMF Group’s 2023 Global Financial Complexity Index, the Cayman Islands would gladly remain at the bottom of its list.
The annual index ranks various jurisdictions around the world for the complexity of their business environments. The Cayman Islands came in 78th out of 78 jurisdictions ranked in the 2023 index, meaning it has the least complex business environment. It marks the second consecutive year — and the fifth time in the past seven years — that Cayman has landed in the last spot on TMF Group’s Financial Complexity Index.
“The Cayman Islands remains the least complex jurisdiction in the [Global Financial Complexity Index], boasting simple entity incorporation and accounting and tax standards, which make setting up and operating a business here relatively easy,” the 58-page report reads. “Regulators in the Cayman Islands take a ‘light touch’ approach, and regulation itself is transparent and clear.”
The report also discussed how the Cayman Islands has adopted a range of global regulatory regimes.
“Businesses in the Cayman Islands are now well aware of these requirements and navigating these has become a familiar task for many multinational outfits,” the report stated, noting that some new clients might not expect the high standard of regulation. “Businesses can be surprised by the level of detail required for KYC and AML purposes, thus making the process of opening a bank account a more rigorous affair. However, this level of regulation feeds into the stability of the jurisdiction and its standing as a global financial centre.”
The index is compiled using the combined knowledge of a team of experts along with more than 200,000 data points recorded over the past 10 years. The result, it states, is “an authoritative and trusted annual index and roundup of compliance trends, that helps you to navigate business complexity around the world.”
The report states that the 2023 index is based on 292 indicators relating to business complexity.
“These data points are used to compile a global ranking of the 78 jurisdictions, based on the complexity of their business environments and covering legislation, compliance, accounting procedures, tax regimes, human resources (HR) rules and payroll processes.”
Cayman’s legislation and compliance regimes were specifically highlighted by a TMF Group’s expert on the Cayman Islands: “Cayman is way ahead of the curve compared to the rest of the world, when it comes to regulatory and compliance legislation.”
The report noted that accounting and tax rules are becoming more stringent everywhere.
“For example, it’s now less common to be able to do business without being registered with relevant tax authorities,” the report stated. “This is only possible in 13% of jurisdictions globally in 2023. This includes those jurisdictions like the Cayman Islands and the [United States], where doing business is typically simpler and governments actively work to make all stages of business incorporation and operation as straightforward as possible.”
Cayman’s continued ranking as a place that’s easy to do business comes as no surprise to the professionals providing services to overseas investors.
Ogier attorney Cline Glidden Jr. said the Cayman Islands remains an investor-friendly environment and cited the high quality of the professional service providers as one reason why it is easy to do business here.
“In order to service sophisticated clientele, immigration policies have been developed over time which allow for the financial services industry to both attract and recruit high-calibre talent in the marketplace and mentor and develop local talent,” he said. “This balance coupled with a sound regulatory framework, allows for the delivery of the top-notch service that clients have come to expect when doing business in Cayman.”
This article was originally featured in the September/October 2023 print edition of Camana Bay Times.
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