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Economic Times
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Eye on IPO shores, companies set sail for Cayman
- Indian startups building global software products are considering the Cayman Islands for registration, offering flexibility for accessing capital markets worldwide.
- Venture backers like Accel Partners are encouraging early-stage SaaS startups to register in the tax-neutral Cayman Islands.
- Previously, US was the preferred destination for Indian SaaS companies, but now Cayman Islands is gaining traction due to various factors.
- Indian stock markets are becoming more attractive for startups, leading to a shift in preferences for IPO destinations.
- Moving back to India can be costly due to tax implications, with examples of companies paying significant amounts when relocating.
- Cayman Islands is appealing for SaaS startups due to its tax benefits and flexibility in managing global footprints.
- US investors are increasingly comfortable with Cayman Islands as a parent entity for startups with subsidiaries in different countries.
- Setting up in Cayman Islands allows startups the flexibility to move to the US or India as needed.
- The shift in domicile back to India involves inbound mergers to benefit from tax exemptions under the Income Tax Act.
- Certain downsides include the lack of a double taxation avoidance treaty between India and Cayman Islands, leading to potential tax issues for Indian subsidiaries.
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