The ES Act requires all Cayman Islands entities (now including all types of partnerships) to notify the Tax Information Authority (the “TIA”) of, amongst other things, whether or not they are carrying on certain prescribed “relevant activities” and if so, whether or not they are a “relevant entity”. Subject to certain exemptions, relevant entities carrying on one or more relevant activities must satisfy an “economic substance test” as set out in the ES Act. Notification, and where applicable, compliance and reporting is required on an annual basis.
It is anticipated that a large number of partnerships will not be required to satisfy the economic substance test and complete annual reporting on the basis that they are either exempt investment funds, exempt domestic businesses, tax resident outside Cayman or subject to limited requirements as pure equity holding entities. All entities will however remain subject to the annual notification requirements.
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Expansion of Cayman Economic Substance Regime to Include Partnerships