Economic substance in the Cayman Islands

The International Tax Co-operation (Economic Substance) Act (2021 Revision) (as amended, the Substance Act) imposes economic substance requirements on companies, LLCs and LLPs in the Cayman Islands. The Substance Act was introduced in response to concerns of the EU Code of Conduct Group regarding favourable tax regimes facilitating offshore structures that generate profits without real economic activity. The Substance Act also reflects Cayman's commitment as a member of the OECD's Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and, in particular, BEPS Action 5.