The major offshore jurisdictions recently introduced economic substance rules that will require corporations or partnerships organized or registered in these countries to implement business substance at the local level or ultimately be compelled to wind down their operations.
The economic substance requirements contained in legislation varies from jurisdiction to jurisdiction and have been drafted in line with the types of functions being performed by the foreign entity (e.g., holding company functions versus IP licensing, sales and distribution, insurance, finance, etc.). The new laws are responsive to global Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) standards regarding geographically mobile activities. Requirements of this type are rapidly being implemented by all OECD-compliant “no or only nominal tax” jurisdictions.
The major jurisdictions impacted by these new rules include the following:
- Cayman Islands
- British Virgin Islands
- Isle of Man
- Marshall Islands
Receive a copy of our whitepaper that explains how these economic substance regulations may affect your multinational organization and reach out to our International Tax Services team today to find out how we can help you navigate the new laws.