As published on caymannewsservice.com, Wednesday 30 June, 2021.
(CNS): Government has published new regulations that come into force today requiring partnerships to notify with the Tax Information Authority (TIA) and where relevant file an economic substance return to ensure this jurisdiction can continue to do business in the European Union. Financial Services Minister André Ebanks said the rules address the EU’s Tax Good Governance initiative, which has assessed tax regimes in countries, including Cayman, Bermuda, Guernsey, Isle of Man and Jersey. Following the assessment, the EU requested these countries extend economic substance requirements to partnerships.
“These changes ensure that Cayman remains strong and cooperative with international tax compliance,” Ebanks said in a release about the new regulations, which cover general partnerships, limited partnerships, exempted limited partnerships and foreign limited partnerships.
Because investment funds, domestic companies and local partnerships do not conduct relevant economic substance activities, they must notify with TIA but they are not required to file an economic substance return. Partnerships formed on or after 1 July 2021 are required to meet economic substance requirements from the date on which they commence relevant activity. Partnerships formed prior to 1 July 2021 must satisfy the economic substance test from 1 January 2022.