Why did Baidu and Alibaba register their companies in the Cayman Islands?

Recently, Asian billionaire Li Ka-shing reorganized two of his groups and moved the registered location of the reorganized companies from Hong Kong to the Cayman Islands, saying that this move was just for the convenience of doing business. In fact, the Cayman Islands has long been an important "settlement place" for Chinese companies. From real estate companies such as Country Garden [-2.82%] and Shimao Real Estate, to sports brands Li Ning [0.99%] and Anta, to Internet giants such as Alibaba and Baidu , many companies that are familiar to Chinese people are registered in the Cayman Islands.

Who “settles” in the Cayman Islands?

Over the past 20 years, 44 of the 50 largest family-owned businesses from mainland China that have gone public in Hong Kong were registered in the Cayman Islands.

2009

1,145 companies listed in Hong Kong

388 Cayman registered

First 8 months of 2010

44 companies listed in Hong Kong

31 Cayman registered

★Basic "national conditions"

The Cayman Islands is a British overseas territory in the northwest of the Caribbean Sea, with an area of ​​only 259 square kilometers and a population of less than 60,000. Finance and tourism are the main sources of income.

★Famous offshore company registration place

The Cayman Islands, the British Virgin Islands and Bermuda are known as one of the three major offshore registration places, and most of the island’s fiscal revenue comes from this part.

★The world's fourth largest offshore financial center

It is reported that the reason why Li Ka-shing registered the reorganized new company in the Cayman Islands is because the transaction amount of this restructuring is huge and involves the distribution of physical shares of the new company. According to relevant Hong Kong laws and regulations, this is not allowed for companies registered in Hong Kong.

Since 2010, Li Ka-shing has made large investments overseas, with Europe as the main investment target and has made full use of various sectors such as infrastructure, telecommunications, and energy. Relocating the company to the Cayman Islands will help further expand overseas M&A projects.

★An average of 4,300 companies are established each year

Data shows that an average of 4,300 companies are registered in the Cayman Islands each year; more than 700 banks in the world have branches in the islands, including subsidiaries of the world's 25 largest banks; the total assets of the island's financial and trust industries have exceeded US$250 billion.

Relaxed policies and convenient operations

Listing "springboard"

If an enterprise needs to introduce foreign capital or go public overseas, it can register an overseas company in the Cayman Islands, acquire 100% of the equity of the domestic company, and then submit the Cayman company for listing in Hong Kong or the United States to complete the overseas financing of the domestic company. This is especially attractive for industries such as the Internet, education, and media, which have restrictions on the introduction of foreign capital in China.

The advantages of this indirect listing are: lower cost, transparent listing procedures, shorter time, and avoiding complex domestic approval procedures.

Service Advantages

World-renowned law firms such as Maples and Calder have dedicated offices in the Cayman Islands and business groups specifically for Chinese people, specializing in helping Hong Kong and mainland companies develop offshore corporate strategies.

Flexible capital flow

The Cayman Islands has no exchange controls, giving businesses greater flexibility in funding international transactions.

Relaxed approval process

The Cayman Islands has a relatively relaxed approval process for listing approval, annual reporting, and other aspects.

Relaxed registration policy

As long as you are 18 years old, you can register a limited company with a registered capital of only US$50,000 and no capital verification is required. At the same time, the company does not need to conduct substantial business in the place of registration and only charges a small annual management fee.

Tax havens are worthy of their name

Fewer taxes

The taxes on the Cayman Islands are only simple taxes such as import taxes and business registration taxes.

The Cayman Islands were granted permanent tax exemption by British Royal Decree in 1978, so there is no direct taxation at all.

Confidentiality of Information

To register a company in the Cayman Islands, only one shareholder and one director are required, and the shareholder and director can be the same person. The shareholder information is kept strictly confidential.

At the same time, the company registered in the Cayman Islands is in the form of an exempted company, which means that it does not have to pay taxes locally and has a strong tax avoidance effect.

Tax avoidance routes

Many shareholders of registered companies may never have been to the Cayman Islands. After obtaining a registered account, they use shell companies in offshore jurisdictions to create a large number of related transactions and then transfer corporate profits to the shell companies.

For example, because the Cayman Islands has no corporate income tax, by buying high and selling low, profits can be transferred to offshore companies and losses can be left to domestic companies, thus avoiding domestic value-added tax.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.