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Anguilla Implements Economic Substance Requirements — Orbitax Tax News & Alerts

Anguilla has introduced economic substance requirements through a series of amendments to the laws on companies in general, on international business companies, on limited liability companies, and on limited partnership, as well as associated regulations. Although provided separately, the economic substance requirements are generally the same and include that companies/partnerships engaged in a relevant activity must meet an economic substance test. Relevant activities include:

  • Banking
  • Insurance
  • Fund management
  • Financing and leasing
  • Distribution and service centre
  • Shipping
  • Intellectual property business
  • Headquarters
  • Holding company

The general economic substance test includes that:

  • The company/partnership:
    • has an adequate number of qualified employees engaged in the relevant activity who are physically present in Anguilla;
    • incurs in Anguilla an adequate level of expenditure in relation to the activity; and
    • has adequate physical assets (whether leased, rented or owned) in Anguilla;
  • The company/partnership carries on the appropriate core-income generating activities in Anguilla for the relevant activity; and
  • The "mind" and management for the relevant activity is in Anguilla.

For high-risk intellectual property entities and holding companies, separate substance requirements apply.

Where a relevant activity is carried on, an annual economic substance return must be filed annually and include adequate information to determine whether the economic substance test is met. However, a general exemption from the substance test is provided in cases where:

  • The company/partnership is centrally managed and controlled or carries on the relevant activity in a jurisdiction where the rate at which the company/partnership may be charged tax is 10% or higher;
  • The company/partnership is resident for tax purposes in the jurisdiction; and
  • The company/partnership files with the Registrar evidence of its tax residence in that jurisdiction and that an appropriate tax return has been submitted to the relevant tax authority of that jurisdiction in relation to the relevant activity.

The relevant laws and regulations were published in the Official Gazette in January 2019 and apply from 1 January 2019.