Fund Compliance and Regulatory Review
GIL FUND SERVICE
Economic Substance Update:
Your Cayman US Dollar Fund Maybe in the Scope of the ES Regime
The following two amendments to the Economic Substance regulations, published on 29th June 2021 in the Cayman Islands and came into effect on 30th June 2021, bring into scope the Exempted Limited Partnerships (“ELPs”), Partnerships (“Partnerships”), and Foreign Limited Partnerships (“FLPs”).
– International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021
– International Tax Co-operation (Economic Substance) (Prescribed Dates) (Amendment) Regulations, 2021
As a result of these amendments, the date from which these entities shall satisfy the economic substance test in relation to a relevant activity shall be –
(a) in the case of an such entity that was not in existence prior to 30th June, 2021, the date on which the entity commences the relevant activity; or
(b) in the case of an such entity that was in existence prior to 30th June, 2021, 1st January, 2022.
Heretofore, among the partnership type entities, only the Limited Liability Partnership (LLP) type entities are required to comply with the ES laws and regulations, while the ELP type entities, which are commonly used while an investment fund is formed, are not required to do so.
Since July 1, 2021, where an ELP is only an “Investment Fund” carrying on no other activity/ies, what the ELP shall do is to submit a “Notification” form before the annual renewal at the end of each year only, so as to notify the Tax Information Authority that it is an Investment Fund which carried on no Relevant Activity.
- International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021
- International Tax Co-operation (Economic Substance) (Prescribed Dates) (Amendment) Regulations, 2021
Cayman Private Fund FAR Form to be Issued on July 9
As for the Extension of Deadline for the First Filing of Private Fund Annual Return, on July 1, 2021, CIMA issued an industry notice relevant to the Extension of the Deadline for the first filing of the Private Fund Annual Return. The Private Fund FAR form (the “Form”) would be available on July 9, 2021. However, the deadline for filing both the Form and the Audited Financial Statements still extended to September 30, 2021.
GIL Reminds you:
Failure to complete the auditing on time shall result in a fine of CI$20,000 (about US$24,400) unless exempted by CIMA.
(5) A person who contravenes subsection (1), (2), (3), or (4) commits an offense and is liable on conviction to a fine of twenty thousand dollars.
(6) The Authority may, in relation to the whole or part of any financial year of a private fund, exempt a private fund from the requirements of this section either absolutely or subject to such conditions as the Authority may deem appropriate.
S. 13(5) & 13(6), Private Funds Act (2021 Revision)
- CIMA Notice “RE: Fund Annual Return (“FAR”) Filings for Private Funds”, 1 July 2021
- Private Fund Act (2021 Revision)