This piece covers multiple updates on business, regulation, legal, reporting deadlines and references in Cayman Islands that will impact your business.
Key Business Updates
Private Fund Law
The Cayman Islands, pursuant to the Private Funds Amendment Law 2020 introduced changes to Private Funds resulting in certain funds falling into the purview of the Cayman Islands Monetary Authority (CIMA) regulation.
A Private Fund would include any fund that:
What does it mean for Private Funds?
Managers, sponsors or GP’s of Private Funds will have to register with CIMA and comply with the associated duties and responsibilities, including the requirement to:
Key Regulatory Updates
Cayman may be re-added to EU blacklist
The Cayman Islands were removed from the European Union “EU” Annex I list of non-cooperative jurisdictions for tax purposes on October 6, 2020. However, the European Parliament held a meeting on December 7, 2020 to plan a new blacklist of tax havens and intend to include the Cayman Islands.
The EU is relying on the research from the Tax Justice Network which claims that 60% of the profit which goes through the Cayman Islands escapes taxation in their countries, compared to a mere 2% going through nations that are currently on the blacklist.
The Cayman Islands Government and Cayman Finance intend to conduct a review into the Tax Justice Network’s research which they have described as having “fundamental statistical flaws and needed to be addressed”.
Updated FAR for mutual funds
CIMA has issued an updated Fund Annual Return (FAR) Form reflecting the requirements introduced by the Mutual Fund (Annual Return)(Amendment) Regulations 2020. Any mutual funds with a financial year end of June 30, 2020 or later must use the updated FAR Form.
Private Funds registered under the Private Funds Law (Revised) will have a separate FAR Form. This remains under consultation and has not yet been published by CIMA.
Key Legal Updates
Cayman Island Constitution Changes – Acts of Parliament Law, 2020
The Cayman Islands has become the third British Overseas Territory to have a legislature known as the Parliament. As part of the recent changes from the Legislative Assembly to Parliament, the Citation of Acts of Parliament Law, 2020 was passed on December 7, 2020 and came into effect on December 8, 2020. Due to the Citation of Acts of Parliament Law, 2020 all laws in the Cayman Islands will change their name to replace “Law” with “Act”.
FATCA /CRS Reporting
DITC Portal: There was a delay in the launch of the Department for International Tax Cooperation’s (DITC) new electronic portal (DITC Portal) for FATCA and CRS registration and reporting.
The DITC has clarified that users are able to use the new portal to register new FIs, complete AP/PPoC/Secondary User updates, submit CRS Compliance Forms and FATCA Returns.
CRS Compliance Form for 2019: The DITC has confirmed that the deadline to submit the CRS Compliance Form for 2019 has been extended to September 15, 2021. Please note that this deadline will coincide with the deadline for the 2020 Reporting Period.
The updated reporting for the forthcoming deadline is as follows:
Entities are now able to submit ES notifications for 202x financial years commencing in 2020. The DITC has announced new filing deadlines for Economic Substance Filings.
Period End Date (for purposes of the ES Return)
December 31, 2019 – 30 April 2020
ES return (all except IP Business)
April 30, 2021
May 1, 2020 – onwards
12 months after the period end date
December 31, 2019 – February 29, 2020
ES Return with Type Income: Relevant Activity – IP Business and Form for Entity Tax Resident in Another Jurisdiction
February 28, 2021
March 1, 2020 – onwards
ES Return with Type Income: Relevant Activity – IP Business and TRO
Please note that all Cayman corporate entities are required to submit the annual economic substance notification confirming whether or not they were a Relevant Entity during their economic reporting period commencing in 2020. This is a prerequisite to filing the entity’s annual return and includes investment funds.
CIMA Guidance Updated
The Cayman Islands Monetary Authority acts and regulations are accessible here.
Please find below the most recent CIMA guidance updates:
How we can help
We provide full support to Cayman’s Private Funds for compliance with their regulatory duties for Cayman Islands domiciled Private Funds, including our custody services through our CIMA regulated Custodian.
To support the independent oversight with cash monitoring, we can provide independent fund administration services.
We provide support in the preparation and submission of FAR and CRS forms and will continue to monitor the development of all regulatory issues closely. We encourage you to subscribe to our Regulatory Updates to keep up to date with global regulatory changes affecting your business.
Speak to our expert team today to learn more.
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