In response to the European Union (EU)’s Economic Substance legislation, the Cayman Islands have since late 2018 taken concrete action to show commitment towards substance compliance. One such efforts is the International Tax Cooperation (Economic Substance) Law, 2018, which was gazetted on 27 December 2018 and came into force on 1 January 2019. In the months that followed, the Cayman Islands’ Government released more amendments and guidance, which you can find in detail below.
With the landmark date of 1 July 2019, the substance legislation becomes applicable to all Cayman companies that existed prior to 1 January 2019, while all other companies formed on or after 1 January 2019 will have to make efforts to comply with substance requirements and demonstrate good corporate governance as soon as possible.
Additionally, the Cayman Islands are now expected by the European Union (EU) to adapt their legislation with regards to investment funds by the end of 2019.
Cayman Islands Economic Substance legislation timeline
|5 Dec 2017||European Union (EU) releases list of non-cooperative tax jurisdictions, commonly known as the EU ‘Blacklist’ and ‘Greylist’|
|27 Dec 2018||The International Tax Cooperation (Economic Substance) Law, 2018 gazetted|
|1 Jan 2019||The International Tax Cooperation (Economic Substance) Law, 2018 officially in force|
|30 Apr 2019||The International Tax Cooperation (Economic Substance) (Amendment of Schedule) (No.2) Regulations, 2019 and Economic Substance Guidance Version 2.0 approved by the Cayman Islands Government, which provides more guidance on ‘Core Income Generating Activities’ (CIGA)|
|17 May 2019||European Union (EU) removes Aruba, Barbados, Dominica and Bermuda from the ‘Blacklist’. The Cayman Islands remain on the ‘Greylist’ for further observation.|
|1 Jul 2019||All existing Cayman entities now within scope of legislation and must start demonstrating substance compliance|
|2020 onwards||All relevant Cayman entities to declare their annual return as to whether or not they are conducting a ‘Relevant Activity’|
Vistra's services and solutions
- Cayman Islands Economic Substance Classification Questionnaire
The Cayman Islands Economic Substance Classification Questionnaire aims to help clients determine the classification of their Cayman company as it applies to the substance legislation. In order to know if your company is fully compliant with the International Tax Cooperation (Economic Substance) Law (“the Law”), it is crucial to determine whether or not it is within the scope of the legislation, which depends on a range of factors, such as your company’s tax residence, activities and other aspects of its business model.
The Classification Questionnaire is designed specifically to help you assess your Cayman entities’ status in the most convenient and effective manner, as well as to gain a better understanding of what further action you should consider taking in order to ensure full compliance with the substance legislation.
In addition, we also a wide range of substance services to help clients navigate the complexity of substance compliance, such as legal opinion, in-scope advisory, remediation support, as well as in-jurisdiction substance solutions. Contact us at [email protected] to find out more.
To find out more about how Vistra can help your Cayman Islands entity ensure substance compliance, please reach out to your Account Manager or regular Vistra contact, or any of our in-country representatives here.
Alternatively, you can make an enquiry by clicking the button below, and our teams will get back to you shortly: