Economic Substance - Cayman Islands

Pure Equity Holdings Companies - Annual Filing

Overview

The International Tax Co-operation (Economic Substance) Act (ESA) was introduced in the Cayman Islands in response to the OECD’s Base Erosion and Profit Shifting framework.

Under the ESA, any relevant entity which carries on a relevant activity and receives relevant income in a financial period must satisfy the economic substance test in relation to that activity (ES Test) and make an annual filing with the DITC.

Relevant Entity

A relevant entity includes limited liability companies, registered foreign companies, general partnerships, limited partnerships, exempted limited partnerships, limited liability partnerships and foreign limited partnerships.

Investment funds, trust vehicles, domestic companies, local partnerships, and entities that are tax resident outside the Cayman Islands are excluded.

Relevant Activity

“Holding company business” which means the business of a pure equity holding company, and “pure equity holding company” means a company that only holds equity participations in other entities and only earns dividends and capital gains.

Investment funds, trust vehicles, domestic companies, local partnerships, and entities that are tax resident outside the Cayman Islands are excluded.

Reporting Requirements

Pure Equity Holdings Companies will need to make an annual filing with the DITC within 12 months of the entities financial year end, together with the submission of financial statements or books of account.

How can Anomaly International Help

We can assist you with preparing the financial statements or books of account for the entity which will be submitted together with the annual filing.

Please reach out to paul.young@anomalyinternational.com to discuss further.