Cayman Economic Substance Notification Form

Cayman Economic Substance Notification Form

All legal entities domiciled or registered in the Cayman Islands are required to file an economic substance notification (ESN) to the Tax Information Authority (TIA) by 31 January each calendar year irrespective of whether or not they are a relevant entity conducting a relevant activity during their previous financial year.

ES Test - To determine whether an entity falls under the scope of the Cayman Economic Substance (ES) Law, it needs to establish two key factors:
  1. Relevant entity- The entity must first assess if it qualifies as a "relevant entity." In the Cayman Islands, relevant entities generally include most types of companies, such as Cayman companies, LLCs, LLPs, foundations and foreign companies registered in the Cayman Islands. However, some entities are specifically excluded, such as investment funds and entities that are tax-resident outside of the Cayman Island. 
  2.  Relevant activity- If the entity is a relevant entity, it then needs to determine if it is conducting any "relevant activities" as defined by the ES Law. Relevant activities include:
    1. banking business
    2. distribution and service centre business;
    3. financing and leasing business
    4. fund management business
    5. headquarters business
    6. holding company business;
    7. insurance business;
    8. intellectual property business; and
    9. shipping business
Guidelines to complete the ESN Form

The ESN form must be completed for each entity in accordance with the activities it conducts. Below are general guidelines for completing the form. As we act solely as the formation agent, these guidelines are for informational purposes only. For any formal advice, please consult a qualified Cayman attorney. We do not accept any liability related to the completion of the form. If you need further detailed explanation on the  what is considered to be a relevant entity and relevant activities, please refer the following guidance provided by the Cayman Tax autjrotiy over Here
  1. Web 3 Cayman Foundation- Complete the particulars of the entity as per the incorporation documents.  (a to c in the form), ES reporting period will be 2024(the financial year for which the ESN form is being submitted). The remaining section in the form should be completed as follows:
    1. No
    2. Yes
    3. No
    4. NA
    5. 31st December
    6. Yes
  2.  Cayman Exempted Liability Company (ELC)  - Complete the particulars of the entity as per the incorporation documents.  (a to c in the form), ES reporting period will be 2024 (the financial year for which the ESN form is being submitted). If the ELC is an investment fund, please contact us for completing a separate form. If not a investments fund, remaining section may be filled as follows: 
    1. No
    2. Yes
    3. Relevant activities- If the entity carry on relevant activities(mostly the Cayman ELC we incorporate in holding entity)
    4. If the entity is setup for holding shares it can chose 'holding business'. In the context of the Cayman ES Law, a "holding company business" refers specifically to a pure equity holding company. This is defined as a company that solely holds equity participations in other entities and earns only dividends and capital gains from these equity interests.
    5. 31st December
    6. Yes              
Next Steps for the Relevant Entity Doing Relevant Activities
  1. Financial Statements- Every relevant entity which is conducting relevant activities has to submit the financial statements or management accounts as of the financial year-end. It can be in the form of a simple balance sheet showing assets, liabilities and profits for the company.
  2. ES returns- When an entity is conducting relevant activities under the Economic Substance (ES) law—as is the case with most of our ELC entities—the ES return must be submitted via the DITC Portal. The contact details of the person responsible for submitting the ES return must be included in the Economic Substance Notification (ESN) form, which is submitted as part of the annual renewal process. Should there be any changes to this contract, the ESN form can be amended accordingly. It is crucial to ensure that the correct contact information is provided in the ESN, as this person will need to register on the system and the entity will be assigned to them for ES return purposes.If you would like the registered agent to submit the ES returns on the DITC portal, there is an additional cost.

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