Update on Economic Substance requirements in the Cayman Islands

Further to our update in September 2020, the Cayman Islands Department for International Tax Cooperation (DITC) has opened its portal for Economic Substance (ES) filings.  This portal should be used for all entities considered to be relevant entities carrying on a relevant activity as described in our previous update.

Relevant entities are required to submit their ES return using the DITC portal.  Either the registered office or a secondary user can submit the filings on the DITC Portal.  The DITC has provided sample returns for Pure Equity Holding Companies along with various other documents for entities to review (https://www.ditc.ky/es/es-legislation-resources/).

AMS has created its own proprietary portal to collect this information from clients for those who wish for AMS to submit the information to the DITC.  Please contact AMS to discuss your entity’s ES situation and requirements.


Registration and Key Dates

  • For relevant entities which are carrying on any of the relevant activities except IP business and reporting on a period ending any time between 31 December 2019 and 30 April 2020 (both dates inclusive), the deadline is now 30 April 2021.
  • For such entities reporting on a period ending from 1 May 2020 onwards, the deadline is 12 months after the period end date.

 

Penalties

  • Relevant entity fails to submit proof of satisfaction of the ES Test to the TIA – USD$6,098 fine, with an additional USD$610 accruing each day the failure continues.  The fine must be paid within 30 days and can be appealed to the Grand Court.
  • Relevant entity fails to satisfy the ES Test – USD$12,195 fine following issuance of a notice to direct the relevant entity to take action to satisfy the ES Test.  If the notice is not complied with in the subsequent financial year an application for a court order to require the entity to take specific action, to declare the entity defunct or for the entity to be struck off.

 

Please contact David Fiebig at david.fiebig@amsfinancial.com or +1 517-213-8096 to discuss how the Economic Substance requirements and recent amendments may affect your business and how AMS Financial Group can assist you with compliance.

We look forward to receipt of the additional information required to be reported to the DITC.

In this regard, please proceed to complete the required forms as follows within our Economic Substance Portal :

Pure Equity Holding Business
Fund Management Business

For all other relevant activities, please contact us directly.

Further information can be found within the  ES Guidance Notes issued by the DITC.

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