Yes, the Annual Return related to Economic Substance in Cayman Island is extended. As per the initial guidelines issued by the Authority, the Annual Return has to be reported to the authority by 31st March 2020 for the financial year ending December 2019.
But as a result of Coronavirus (COVID-19) pandemic and due to disruptions to regular operations the deadline to file Annual return has been extended to 30th June 2020 by Registrar of Companies (ROC) and the Department for International Tax Co-operation (DITC). Also, the due date to file Economic Substance Notification filings will be 30th June 2020.
Any penalty for failure to file a Report or notification will come into effect only from 1st July 2020.
The Economic Substance in Cayman Island Law cited as the International tax Co-operation Law 2018 was introduced in Cayman Island in December 2018 and is in effect from 1st January 2019. This law provides for the Substance test which needs to be satisfied by certain entities and for incidental and connected persons.
As per Section 4 of this Law, a “Relevant Entity” that carries “Relevant Activity” is required to satisfy the Economic Substance test about that Relevant activity.
As per the Schedule to the law, Relevant Activities to which Economic Substance is applicable are as below:
It means if any licensee carries out any of the above-mentioned activity, then it will have to comply with the requirements of Economic Substance Law. As per Section 4(2) of the law, the relevant entity meets the Compliance requirements of the law if it satisfies the below-mentioned points:
In case of failure in 1st Financial year: $10,000 on failure to satisfy with Economic substance test
In case of subsequent failure: $100,000
For Easy Reference:
CA. Manu Palerichal
Mobile:+971 50 282 8727
CA. Dhara Yagnik
Mobile: +971 56 595 6836