International free zones such as the Cayman Islands and Malta
are popular choices for innovative companies seeking opportunity.
Both locations also offer superb options for the industry as a
result of enviable locations, low tax rates, and solid regulations.
In Malta's Freeport, for example, you'll find a key
destination for big names in shipping as well as an increase in
blockchain and crypto-based companies. As an EU member state, Malta
might seem like the best choice for investment and citizenship
opportunities, but with a deepening political crisis,
investigations into corruption, and uncertainty surrounding Brexit
negotiations and the stability of the EU, entrepreneurs are
proceeding with caution.
The Cayman Islands are renowned for long standing economic
opportunities, as well as a stable political system; in short, a worthy
alternative to Malta. But ultimately, which location offers the
better opportunities for businesses?
Emerging Fintech, Blockchain, and Crypto Enterprise
It's no secret that tech is big business
globally in today's digital world. Both Malta and Cayman
are at the forefront of the blockchain boom, offering attractive
prospects for crypto investors.
In fact, Malta has become known as 'Blockchain Island',
and hosted the AI and Blockchain (AIBC) summit in November 2019.
Industry efforts are fully supported by the government, which has
invested in network infrastructure and offered tax incentives to
attract and retain crypto entrepreneurs. Cayman isn't sleeping
on this lucrative development. Building upon its position as a
financial centre within the Americas, Cayman has rapidly
established itself as a leader in emerging fintech. Just like
Malta, Cayman's blockchain businesses are supported by the
government's favourable regulatory and tax environments, as
well as the nation's physical and virtual infrastructure.
Economic Strength, Political Stability, and Governance.
Historically, Malta has offered enticing opportunities to
entrepreneurs. Malta gained independence from the UK in 1964, and
is a member of the EU, Commonwealth, Council of Europe, and OSCE.
The country has benefitted from the past decade of global economic
growth and currently has an unemployment rate of 3.4%.
However, Malta has recently been affected by a political scandal
surrounding its outgoing prime minister, Joseph Muscat. It is
alleged that close aides of Muscat are involved in the 2017 murder
of investigative journalist Daphne Caruana Galizia. Although
investigations are ongoing, it has unveiled wider issues of
corruption in Malta.
Cayman is an autonomous British Overseas Territory, which means
that it falls under British jurisdiction and sovereignty, but is
not a part of the United Kingdom. Cayman's head of state is the
British monarch, but it is locally self-governed by a
democratically-elected government.
The Cayman Islands are politically and economically stable, with a
comparatively high GDP per capita of USD $72,607 vs Malta's
$36,988. As well as encouraging investment from new residents and
overseas entrepreneurs, government initiatives and regulations help
to provide ample career opportunities for Caymanians. Cayman
Code Academy is a CEC-funded program designed to upskill and
train the local workforce to better serve the 60+ and growing
blockchain businesses now set up in CEC's Cayman Tech City. As a result, Cayman's
unemployment rate is extremely low, at just 2.8%.
Aviation and Maritime Strength
Malta is ideally-placed in the Mediterranean, allowing aviation
and shipping companies to take advantage of proximity to lucrative
regional destinations and act as a midway point for onward travel.
Low- and no-tax arrangements apply to these organisations, too
– an excellent opportunity for foreign investors. Registering
in Malta also means that companies are regulated by the EU; which
can involve additional administration but gives aviation businesses
in the country the prestige of EU law compliance. Registering a new
aviation company in Malta can take as little as 2 weeks.
Malta also has a strong maritime tradition. In 2018, the value of
its registered vessels exceeded $52 billion; dwarfing the figures for economic
heavyweights like China, the United States, and the United Kingdom.
Malta also has one of the largest dead-weight tonnage figures in the
world, and an expansion rate of over 7%.
Cayman's aviation industry is similarly
well-developed and highly-regulated. Setting up an air business in
Cayman takes just 4 – 6 weeks, and the proximity to North,
South, and Central Americas – and in particular the other
Caribbean nations – is a substantial plus. Although Cayman
has a smaller shipping industry, it is growing. More than 16,000
containers arrive at the islands each year, and the islands'
enviable location – as well as sustained government support
– provides a large and ongoing opportunity.
Streamlined Business Set Up
Starting a business in Malta is quite simple, especially for
foreign investors operating a free zone company in the Maltese
freeport. There are companies that will help entrepreneurs to
complete the entire process, for a fee. The only caveat is that
there must be at least one Maltese legal representative associated
with the company.
Corporation tax on the island is 35%, but foreign investors are
offered refund incentives by the government, reducing the effective
rate of tax to a maximum of 10%. For many investors, the tax rate
can be 0%. The set-up process in the Cayman Islands is
straightforward, and there are additional benefits, such as zero
corporation and income tax (as opposed to reduced corporation tax
in Malta), 5-year renewable working residency visas for all staff
regardless of country of origin, and no cap on the number of people
working in a Cayman office.
Presuming a business falls into one of the Cayman Tech Zone categories for new
enterprises, it can be approved within just 5 days, and fully
operational within 4 to 6 weeks. Similar to Malta, specialist
companies take care of everything for a fee – they can even
help with the practicalities of relocation such as finding homes
for your employees and their families.
Caribbean vs Mediterranean Lifestyle
Both countries drive on the left as a result of lasting British
influence, and the idyllic island life and plenty of sunshine can
make working life much more beneficial.
The Cayman Islands, as a tropical Caribbean
country, offer year-round warmth averaging 28°C whilst
Malta has a Mediterranean climate in excess of 30°C during the
hot summers, and relatively mild winters with a daily high in the
teens. In Malta, you'll enjoy a relaxed, Mediterranean
lifestyle, with great food and culture, as well as local and
regional wines. Cayman offers beautiful beaches and turquoise seas, with
cosmopolitan resorts, luxury culinary experiences, and ample outdoor
activities.
The Verdict: Cayman or Malta?
In both Cayman and Malta, special economic arrangements offer
reduced or zero corporation tax to businesses owned by foreign
entrepreneurs. Both countries have well-educated, highly-skilled
workforces and reliable digital infrastructure. Company
registration is straightforward and relatively fast. However,
Malta's latest political and corruption scandals are a worrying
development. Cayman, conversely, is on a sustained upward
trajectory. On balance, Cayman offers the superior package.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.