August 2019 - The Cayman Islands Department for International Tax Cooperation ("DITC") has issued an industry advisory (click here) regarding developments in relation to economic substance requirements. Our advisory with an overview of the economic substance requirements can be viewed here and our subsequent update can be viewed here.
Positive Outcome of Assessment of the Cayman Islands
On 23 July 2019, the OECD Inclusive Framework on BEPS published the results of OECD level reviews of the economic substance legal framework of the Cayman Islands and other OECD-compliant jurisdictions with no or nominal tax. The outcome is positive, with the Cayman Islands' legislative framework for economic substance judged to be in line with OECD standards. The legislative frameworks of Bermuda, the British VirginIslands, Guernsey and Jersey were also judged to be in line with OECD standards.
In terms of next steps, there will be an annual monitoring process at OECD level to cover any changes in the legal framework, as well as the implementation of safeguards and enforcement measures in practice.
Draft legislative amendments are expected to be issued for consultation in August with a view to the Cayman Islands being considered by the OECD as having a fully equipped monitoring mechanism.
Economic Substance Guidance Update
An updated version of the Tax Information Authority's Guidance on Economic Substance for Geographically Mobile Activities ("ES Guidance") is being prepared in consultation with industry working groups over the coming weeks. The new version of the ES Guidance will include sector specific guidance for each relevant activity, as well as in respect of the exemption for investment funds, and is expected to be published after summer.
Walkers has a dedicated global Regulatory & Risk Advisory practice group of regulatory lawyers that can offer legal advice and guidance inconnection with all aspects of the economic substance regime as it continues to evolve. Through its affiliate, Walkers Professional Services, Walkers is also committed to providing economic substance solutions that will enable all clients impacted by the regime to satisfy the necessaryrequirements for substance in the Cayman Islands, including notification and reporting.
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.