New SUBSTANCE requirements in the Caymans, BVI and Bermuda in 2020

New SUBSTANCE requirements in the Caymans, BVI and Bermuda in 2020

In February 2020, ECOFIN announced that Bermuda and the BVI would be placed on the "white list" following legislative adjustments based on EU recommendation. At the same time, ECOFIN announced that the Cayman Islands had added jurisdictions not cooperating with the EU to the list.

This happened likely due to the failure to comply with the timing of legislative adjustments to the funds industry. The government has started taking measures to remove the islands from the blacklist.

Legislative changes in the Cayman Islands

At the end of last year, the jurisdictional government issued an expanded draft of guidance on the terms and conditions of industry consultations. A law on cooperation in terms of taxes was published. Adjustments and requirements for the provision and exchange of information were made.

One of the innovations is the application of specific notification requirements of the Law on ES to all legal entities. From 2020, all companies must notify the TIA of their respective activities. The annual notification is sent remotely.

The first notifications are provided by the end of March 2020. The company that has its registered office in the Cayman Islands conducting the relevant activities is subject to an economic presence check and a report is submitted to the TIA in the required form.

Rules on the BVI

The requirements for economic presence in the BVI were published by the ITA in autumn 2019 and were adjusted in February next year. The rules show details of the requirements of the Economic Presence Act for companies with limited liability.

The document follows the draft Code published last spring, but there are some significant differences. It is expected that additional conditions regarding filing requirements and filing periods will be issued in due course. According to the reporting regime, a legal entity's agent must be logged in a database that is generated under the Safe Benefit Search System Act.

Amendments to the laws of Bermuda

With the entry into force of the Economic Presence Amendment Act, guidance has been provided on the basic requirements for the economic presence of firms in a jurisdiction.

The most significant amendment relates to the definition of a "holding" that has been registered in the jurisdiction. After revision, the definition includes net shareholding firms.

Another amendment relates to the definition of "shipping", which now excludes persons who own a facility but do not take part in its use. The main characteristics of this activity were the use and management of the ship.

The amendments also affected the concepts of "insurance", "financing" and "leasing". The amendments clarify what activities will be eligible for the definition. Conditions of maintenance of "local subjects" are simplified. You can learn more about innovations in jurisdictional laws from our experts at IT-OFFSHORE.

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