17 December 2018
On 10 December 2018, the Cayman Islands Government announced the publication of three bills to further strengthen compliance with international standards in relation to harmful tax practices. The bills are built upon the OECD’s Forum on Harmful Tax Practices (FHTP) and were drafted following consultations with the local financial services industry, Cayman regulators, the OECD, and the European Union.
Two of the bills, the Companies (Amendment) (No. 2) Bill 2018 and the Local Companies (Control) (Amendment) Bill 2018, include amendments that would allow exempt companies to do business locally, although these companies would be required to follow the same rules as local companies.
The third bill, the International Tax Co-Operation (Economic Substance) Bill 2018, would introduce economic substance requirements for legal entities engaged in any of nine FHTP categories of business:
If a Cayman entity is conducting relevant business activities in one or more of these categories and that entity is not tax resident in another jurisdiction, it must then demonstrate economic substance in the Cayman Islands.
The bills will be debated in the Legislative Assembly in the near future.
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