There are reportedly about 205 Malaysian companies that have shareholders based in the tax haven Cayman Islands, based on the Companies Commission of Malaysia’s (CCM) data.

Among these are 1Malaysia Development Bhd (1MDB), HSBC (Malaysia) Trustee Bhd, AirAsia Bhd, FOS Apparel Group Sdn Bhd, Utusan Malaysia reported today.

Acting CCM chief executive officer Zahrah Abdul Wahab Fenner said the use of offshore financial centres like the Cayman Islands is the prerogative of each company, based on its strategy.

“Among the possible advantages in investing in offshore financial centres are higher dividends or interests, and incentives such as better taxes,” he was quoted as saying.

Cayman Islands comprises of three islands located in the western Caribbean Sea, south of Cuba, and is a British Overseas Territory.

1MDB’s involvement on the islands had previously caused controversy and drawn allegations that it lacked transparency, including from former prime minister Dr Mahathir Mohamad and opposition leaders like Pandan MP Rafizi Ramli .

Deputy Finance Minister Ahmad Maslan had said that 1MDB’s RM7.18 billion investment in Cayman Islands is being pulled back and this will be completed by the end of the year.

Meanwhile, 1MDB chief executive officer Lodin Wok Kamaruddin had said that the investments were legal and was done through its subsidiary Brazen Sky Ltd for tax reasons and to help settle its US dollar debts.

“Cayman Islands is considered a tax haven for a lot of companies. We had been informed that it is appropriate for us to have a company registered in Cayman Island and for us to have the fund placed with this company.

“This is just a temporary process, because you must remember this fund was initially invested in a joint venture with another party,” Bernama quoted him as saying yesterday.

The Utusan Malaysia report today added that these 205 companies are only a fraction of the 68,000 companies operating in the Cayman Islands, most of which do not conduct business on the islands but elsewhere in the world.

This is because the Cayman Islands government does not impose any direct taxes, and relies of indirect taxation and fees to generate revenue, it said.