There is a reason why the Cayman Islands is considered one of the top Tax Havens in the world. Even though the Cayman Islands utilizes general accounting principles, there is almost no traditional tax in the Cayman Islands.
Unlike most countries in which there is corporate tax that is paid to the government, rather in the Cayman Islands there is a licensing fee which is based in part on the size and value of the company.
The only tax imposed by the Cayman Islands on businesses is when the company is actually performing work in the Cayman Islands. In other words, a foreign corporation can be formed in the Cayman Islands to conduct work outside of the Cayman Islands and when planned properly, the company can properly, significantly reduce or limit tax liability.
Of course, with the introduction of FATCA and FBAR reporting offshore compliance has become stricter, but that does not mean it is impossible to facilitate a business with its base in the Cayman Islands for the purpose of conducting business outside of the Cayman Islands, and still legally reduce the company’s tax liability.