Cayman Economic Substance regime expands to include partnerships
July 21, 2021
The International Tax Cooperation (Economic Substance) Act (2018) introduced the requirement for “relevant entities” domiciled or registered in the Cayman Islands and conducting “relevant activities” to be able to evidence sufficient economic substance in the Cayman Islands.
The scope of the Economic Substance Act has now been extended to include partnerships as “relevant entities” to take effect from 30 June 2021 (including exempted limited partnerships, limited partnerships, general partnerships, and foreign limited partnerships).
All partnerships will be required to submit an annual economic substance notification through their registered office/corporate service provider to indicate whether the entity is in scope. If the partnership is carrying out a relevant activity and is therefore in scope, they will need to demonstrate economic substance in the Cayman Islands.
- Partnerships that were formed prior to 1 July 2021, will need to determine whether they are in scope and take actions to ensure the economic substance test is met from 1 January 2022.
- Partnerships formed on or after 1 July 2021, will be required to satisfy the Economic Substance test from the date of formation to ensure compliance with the Economic Substance Act.
To find out more about how this regulatory change could impact you, please reach out to your usual Waystone representative or contact us below: