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Expansion of Cayman Economic Substance Regime to Include Partnerships

With effect from 30 June 2021 the International Tax Co-operation (Economic Substance) (Amendment) of Schedule Regulations, 2021 serve to expand the application of the International Tax Cooperation (Economic Substance) Act (2021 Revision) (the “ES Act”) to general partnerships, limited partnerships, exempted limited partnerships and foreign limited partnerships.

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.

Practical effect

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

 


Maree Martin
Counsel and Head of Knowledge Management - Cayman Islands

Cayman Islands   +1 345 814 7781


Charlotte Cloete
Head of Conyers Corporate Services (Cayman) Limited

Cayman Islands   +1 345 814 7376


Alan Dickson
Partner

Cayman Islands   +1 345 814 7790


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