Further to our Newsletters of 28 January 2019 and 5 March 2019 on the Cayman Economic Substance requirements (“ES Requirements”), we inform that a revised version 2.0 of the Guidance Notes was issued on 30 April 2019.

You may download a copy of the Guidance Notes v.2.0 here.

The revised Guidance Notes essentially addressed matters which were previously covered by v.1.

However, the ambiguity in respect of how the Regulator expected some provisions to be met were clarified as follows:-

1. Entities tax resident outside the Islands will not be regarded as a relevant entity for the purposes of the ES Law. However, the evidence required to substantiate such claims were tightened. The Authority will regard an entity as tax resident in a jurisdiction other than the Islands if the entity is subject to corporate income tax on all of its income from a relevant activity by virtue of its tax residence, domicile or any other criteria of a similar nature in that other jurisdiction. Additionally, in the event that the entity is a disregarded entity for US income tax purposes, and has a US corporation as its parent, the Authority will consider the entity tax resident outside of the Islands if satisfactory evidence is provided.

The Authority will require any entity claiming to be tax resident outside the Islands to produce satisfactory evidence to substantiate the same. For example, the evidence may include a Tax Identification Number, tax residence certificate together with an income tax return, assessment or payment of a corporate tax liability on all of that entity’s income arising in the Islands from a relevant activity, or, in the case of a disregarded entity for US income tax purposes, a signed statement under penalty of perjury from an external tax advisor or “C” level office stating that all the
entity’s income has been included on the Corporate tax return of the US parent company.

In the absence of such evidence the entity will be regarded as a relevant entity that is subject to ES law. The ES test must be satisfied with respect to any part of relevant income that is not subject to corporate income tax imposed by a jurisdiction other than the Islands.

A business unit or division of the relevant entity that is not a separate legal person from the relevant entity (i.e. a Branch) will likewise be regarded as tax resident outside the islands if the branch is subject to corporate income tax on all of its income in another jurisdiction by reason of its domicile, residence or any other criteria of a similar nature. Satisfactory evidence as above must likewise be produced.

It is specifically stated that a relevant entity should take care not to claim it is tax resident or subject to corporate income tax in another jurisdiction on its gross income arising in the Islands from a relevant activity such that the result would be a circumvention of the ES Test.

2. Pure equity Holding Companies (means a company that only holds equity participations in other entities and only earns dividend and capital gains) are subject to a reduced ES requirement and in this respect, it will be considered as having met the ES requirements if:-

It has complied with all applicable filing requirements under the Companies Law (2018 Revision); and

It has adequate human resources and adequate premises in the Islands for holding and managing equity participation in other entities

It has been clarified that a pure equity holding company maintaining a registered office in the Islands engaging its registered office service provider in accordance with the Companies Law (2018 Revision) may be able to satisfy these reduced substance requirements in the Islands where the pure equity holding company is passively holding equity interests in other entities, depending on the level and complexity of activity required to operate its business.
A pure equity holding company is not required to be directed and managed in the
Islands.

The Guidelines provide that a relevant entity may outsource either some or all of its activity to its service provider but must be able to demonstrate that it has adequate supervision over the outsourced activity. Some or all of the Cayman Islands Core Income Generating Activities (CIGA) may likewise be outsourced but the relevant entity must demonstrate that the CIGA is undertaken in the Islands.

The Guidelines clearly state that the resources of the service provider will be taken into consideration when determining whether the properly an premises test is met. There must be no “double counting” in this regard. Likewise the term “double counting’ has been clarified. For example, if an employee of a service provider spends an hour performing Cayman Islands CIGA for a relevant entity, the same employee cannot spend the same hour performing Cayman Islands CIGA for a different relevant entity. Staff of a service provider should not, when carrying out Cayman Islands CIGA, do one task for multiple relevant entities (such as combined board meetings). Rather, tasks should be specific to each relevant entity so that there is no double counting of any specific task.

3. Notification and Reporting

The Tax Information Authority (“the Authority”) is developing an ES Portal to facilitate electronic filing and reporting to the Authority. A User Guide specifying rules and procedures for use will be published.

A relevant entity that is carrying on a relevant activity and is required to satisfy the ES Test must prepare and submit to the Authority a report for the purpose of the Authority’s determination whether the ES Test has been satisfied in relation to that relevant activity. The report must be made within twelve months after the last day of the end of each financial year of the relevant entity commencing on or after 1 January 2019. A full list of the information required can be found in the Guidance Notes on page 26.

The relevant entity remains responsible for ensuring accurate information is reported on its return and this will include precise details of the resources employed by its service providers, for example based on the use of timesheets.

Further information

Portcullis will be happy to review your structure and recommend preliminary.
solutions and work with Cayman Counsel if required.

For further information, please contact your Relationship Manager.

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開曼群島經濟實質規定2.0版

繼本公司2019年1月28日及3月5日關於開曼經濟實質規定（下稱「經濟實質規定」）的商務通訊之後，在此提出通知，修改後的2.0版施行細則已於2019年4月30日發佈。

您可以在此下載2.0版施行細則

修改後的施行細則，實質上說明了以前1.0版已涵蓋的事項。

然而，就管理者期望各實體如何遵守若干條款的模糊之處，說明如下：

1.開曼群島外稅務居民的實體，不被視為經濟實質法的相關實體。然而，為證明該主張而必須提出的證據，變得更嚴格。若實體來自相關業務的所有收入，皆因其在其他國家的稅務居民身分、居所或任何其他類似性質的標準，而必須繳納公司所得稅，則開曼政府將視該實體為開曼群島外該其他國家的稅務居民。而且，若實體是美國所得稅的非企業實體，且其母公司為美國股份公司，則在提出符合規定的證據後，開曼政府將視該實體為開曼群島外的稅務居民。

任何實體若主張其為開曼群島外的稅務居民，開曼政府將要求該實體提出符合規定的證據證明其主張。例如，證據可能包括稅籍號碼、稅務居民證附上所得稅申報書、以及對於實體來自開曼群島相關業務的所有收入所課徵的公司稅核課稅單或納稅單，或若是美國所得稅的非企業實體，則必須提出一份外面稅務顧問或「C」級辦公室簽名願受偽證處罰的聲明書，聲明該實體的所有收入皆
已併入其美國母公司的公司稅申報中。

若無上述證據，實體將被視為必須受經濟實質法規範的相關實體。任何相關收入若無須繳納開曼群島以外國家所課徵的公司所得稅，則必須通過經濟實質檢查。

相關實體中的一個事業單位或部門，若其並非獨立於相關實體之外的法人（亦即分公司），而該分公司在其他國家的所有收入，皆因其住所、居所或任何其他類似性質的標準而必須繳納公司所得稅，則該分公司亦會被視為開曼群島外的稅務居民，但亦必須提出上述符合規定的證據。其中特別指出，相關實體應該注意，不要主張其為其他國家的稅務居民，或其來自開曼群島相關業務的總收入必須在其他國家繳納公司所得稅，而結果是規避經濟實質檢查。

2. 純股權控股公司（係指僅持有其他實體的股權且僅賺取股利及資本利得的公司）必須遵守的經濟實質規定較為寬鬆，就此方面，在下列情形下，純股權控股公司即被視為已遵守經濟實質規定：

1. 該公司已遵守公司法（2018年修改版）的所有申報規定；及

2. 該公司在開曼群島擁有足夠的人力資源及足夠的營業場所，使其得以持有及管理對其他實體的股權。

其中亦說明，純股權控股公司若依公司法（2018年修改版）在開曼群島設立註冊辦公室，並聘僱註冊辦公室服務供應商，且其乃被動持有其他實體的股權，視其經營事業所必要的業務層級及複雜度而定，則其可能符合開曼群島較寬鬆的經濟實質規定。 純股權控股公司的主導及管理無須在開曼群島進行。

施行細則規定，相關實體得將其部分或全部業務委予服務供應商經營，但必須證明其對委外經營的業務執行適當監督。部分或全部開曼群島產生核心收益的業務（下稱「核心收益業務」）亦得委外經營，但相關實體必須證明核心收益業務確在開曼群島經營。

施行細則明確規定，在決定經濟實質檢查是否妥善通過時，服務供應商的資源會被列入考量。此方面不得有「重複計算」的情形。「重複計算」一詞亦被清楚說明。例如，若服務供應商的某員工花費一小時執行某家相關實體的開曼群島核心收益業務，該相同員工不得花費該相同小時執行他家相關實體的開曼群島核心收益業務。在執行開曼群島核心收益業務時，服務供應商的職員不得同
時為多家相關實體執行同一項工作（例如：合併董事會會議）。每項工作應特別針對每家相關實體，因此任何特定工作不會有重複計算的情形。

3. 通知與申報

稅務資訊管理局（下稱「稅資局」）正在開發一個經濟實質入口網站，促進向稅資局提交電子申報及報告。稅資局將發行一本說明使用規則及程序的使用者指南。

經營相關業務且必須通過經濟實質檢查的相關實體，必須編製並向稅資局提交一份報告，目的在於使稅資局決定該相關實體是否已通過經濟實質檢查。對於在2019年1月1日或之後開始的相關實體，本項報告必須在其每一財務年度結束最後一日起十二個月內提交。施行細則第26頁載有必要資料的完整清單 。

確保相關實體申報表上所載資料正確，乃屬相關實體的責任，包括其服務供應商所用資源細節精確，例如根據使用工作時間表等。

進一步資訊

保得利十分樂意檢視貴公司的結構，並建議初步的解決方案，必要時，亦與開曼律師合作。

有關進一步資訊，請洽詢您的關係經理。