Cayman publishes Bill to supplement the economic substance law

The contents of the Bill reflect feedback received from the EU Commission and the FHTP Secretariat.

The Bill introduces the following new provisions:

• a general anti avoidance rule and related penalties

• the ability for the Tax Information Authority (TIA) to fine a relevant entity that fails to submit to the TIA its annual report within the specified time - the proposed penalty is CI$5,000 with an additional penalty of CI$500 for each day the breach continues

• appropriate functions and powers for the TIA to monitor and verify/audit outsourcing of core income generating activities entities

• the requirement that all entities file a notification, even if not a relevant entity

• details of the information that must be provided to the TIA where an entity claims tax residence outside the Cayman Islands (information on the immediate parent, ultimate parent and ultimate beneficial owner of the entity) and the requirement that the TIA exchange that information with the relevant overseas authorities

For information, the OECD has published Guidance for the Spontaneous Exchange of Information. The Cayman Island rules are currently being drafted, in conjunction with the development of the reporting system, and will be published in due course.