July 2019 - Economic Substance in Bermuda, the Cayman Islands and the BVI – Understanding the Requirements

In December 2018, Bermuda, Cayman Islands and the BVI, along with many other jurisdictions with low or zero rate of corporate income tax, passed legislations that introduced increased economic substance requirements for certain entities.The legislations are designed to meet the requirements outlined by the European Union’s (“EU’s”) intergovernmental Code of Conduct Group (“CoCG”) on Business Taxation, which are aimed at jurisdictions with low or zero rate of corporate income tax.The Organization for Economic Co-operation and Development (“OECD”), in the project on Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”), also issued a document entitled “Resumption of Application of Substantial Activities Factor to No or only Nominal Tax Jurisdictions” (the “OECD document”) in November 2018.