Standards in Public Life Law, 2014 (Commencement) Order, 2020 (SL 7 of 2020)

Amendment of section 4 of the International Tax Co-operation (Economic Substance)

(ECONOMIC SUBSTANCE) (AMENDMENT) A LAW TO AMEND THE INTERNATIONAL TAX CO-OPERATION (ECONOMIC SUBSTANCE) LAW (2020 REVISION) TO MAKE CHANGES TO THE ECONOMIC SUBSTANCE NOTIFICATION REQUIREMENTS AND THE REQUIREMENTS TO PROVIDE AND SHARE INFORMATION; AND FOR INCIDENTAL AND CONNECTED PURPOSES ENACTED by the Legislature of the Cayman Islands. Short title This Law may be cited as the International Tax Co-operation (Economic Substance) (Amendment) Law, 2020. Amendment of section 4 of the International Tax Co-operation (Economic Substance) Law (2020 Revision) - requirement to satisfy economic substance test The International Tax Co-operation (Economic Substance) Law (2020 Revision), in this Law referred to as the “principal Law”, is amended in section 4 as follows — (a) in subsection (2)(a) by deleting the words “Cayman Islands”; and I Assent, Martyn Roper Governor Date: 10th day of February, 2020

(b) in subsection (4) by deleting the words “Cayman Islands” wherever they appear. Amendment of section 5 - guidance The principal Law is amended in section 5(1) and (4) by deleting the words “and with the approval of the Cabinet”. Amendment of section 7 - requirement to provide information The principal Law is amended in section 7 as follows — (a) by repealing subsection (1) and substituting the following subsection — “(1) An entity shall annually notify the Authority of the following — (a) whether or not it is carrying on a relevant activity; (b) if it is carrying on a relevant activity, whether or not it is a relevant entity; in the case of an entity that is carrying on a relevant activity and is tax resident in a jurisdiction outside the Islands — (i) the name and address of its immediate parent, ultimate parent and ultimate beneficial owner and any other information reasonably required to identify its immediate parent, ultimate parent and ultimate beneficial owner; (ii) the date of the end of its financial year; and (iii) the jurisdiction in which the entity is claiming to be tax resident and any other information as may reasonably be required to support that claim; (d) in the case of a relevant entity that is carrying on a relevant activity — (i) the date of the end of its financial year; and (ii) the name and address of the officer who is responsible for providing information to the Authority, and shall provide appropriate evidence to support the information provided in the notification as may reasonably be required by the Authority.”; (b) in subsection (4) — (i) by inserting after paragraph (e) the following paragraph — “(ea) the name and address of any person other than the relevant entity who is conducting the relevant entity’s core income generating activities in relation to its relevant activity;”; and (ii) in paragraph (f), by deleting the words “Cayman Islands”;

by inserting after subsection (6), the following subsection — “(6A) Where under section 4(4), a person is conducting core income generating activities in relation to the relevant activity of a relevant entity, that person may verify the information provided to the Authority under subsection (4) within thirty days after the day on which the information is provided.”; (d) by inserting after subsection (8), the following subsections — “(8A) Where a relevant entity that is required to satisfy the economic substance test fails to prepare and submit to the Authority the report required under subsection (3) within the time specified in that subsection, the Authority shall by notice in writing impose a penalty of five thousand dollars and an additional penalty of five hundred dollars for each day during which the failure to comply continues. (8B) The Authority shall not impose a penalty under subsection (8A) after the earlier of the following — (a) one year after becoming aware of the contravention; or (b) six years after the contravention occurred. (8C) A penalty under subsection (8A) must be paid before the end of the period of thirty days commencing with the date mentioned in subsection (8D). (8D) That date referred to in subsection (8C) is the later of — (a) the date from which the penalty is due under subsection (8A); or (b) if a notice of appeal is given under subsection (8F), the date on which the appeal is finally determined or withdrawn. (8E) A penalty under subsection (8A) shall be paid into the general revenue of the Islands and may be recovered as a civil debt due to the general revenue of the Islands. (8F) A relevant entity that has a penalty imposed pursuant to subsection (8A) may, within thirty days after the notice is given under that subsection, appeal against the penalty to the Grand Court and such appeal shall act as a stay on the enforcement of the penalty. (8G) A relevant entity upon whom a penalty is imposed under subsection (8A) may appeal against the penalty on the ground that liability to a penalty does not arise. (8H) An appeal under this section may be made on questions of law or fact or both and the Grand Court may affirm or reverse the penalty

or substitute its own penalty for that imposed by the Authority.”; and (e) by inserting after subsection (9), the following subsection — “(10) In this section “entity” means — (a) a company that is — (i) incorporated under the Companies Law (2020 Revision); or (ii) a limited liability company registered under the Limited Liability Companies Law (2020 Revision); (b) a limited liability partnership that is registered in accordance with the Limited Liability Partnership Law, 2017; or a company that is incorporated outside of the Islands and registered under the Companies Law (2020 Revision).”. Amendment of section 10 - sharing of information The principal Law is amended in section 10 as follows — (a) in subsections (1)(a) and (2)(a) by deleting the words “parent company, ultimate parent company” and substituting the words “immediate parent, ultimate parent”; and (b) by inserting after subsection (2), the following subsections — “(3) In the case of an entity that is carrying on a relevant activity and is tax resident in a jurisdiction outside of the Islands, the Authority shall, in accordance with relevant international standards and scheduled agreements, provide the information provided to it under this Law — (a) to the competent authority in the jurisdiction in which that entity is tax resident; (b) to the competent authority in the jurisdiction in which the immediate parent, ultimate parent and ultimate beneficial owner of the entity resides; and if the relevant entity is incorporated outside the Islands, to the competent authority of the relevant jurisdiction in which the entity is incorporated. (4) The Authority may, in accordance with relevant international standards and scheduled agreements, provide any information provided to it under this Law as appropriate. (5) In this section “entity” means — (a) a company that is —

(i) incorporated under the Companies Law (2020 Revision); or (ii) a limited liability company registered under the Limited Liability Companies Law (2020 Revision); (b) a limited liability partnership that is registered in accordance with the Limited Liability Partnership Law, 2017; or a company that is incorporated outside of the Islands and registered under the Companies Law (2020 Revision).”. Amendment of Schedule - construction of words and expressions The principal Law is amended in the Schedule as follows — (a) in the definition of the words “Cayman Islands core income generating activities”, by deleting the words “Cayman Islands core income generating activities” and substituting the words “core income generating activities; (b) in the definition of the words “Consolidated Financial Statements” by deleting the word “company”; by inserting in the appropriate alphabetical sequence the following definition — “ “immediate parent”, in relation to an entity, means a person that owns directly twenty-five percent or more of the ownership interest or voting rights in the entity;”; (d) by deleting the definition of the words “parent company”; (e) in the definition of the words “subsidiary company” by deleting the words “parent company” and substituting the words “immediate parent”; and

(f) in the definition of the words “ultimate parent company” by deleting the words “ultimate parent company” and substituting the words “ultimate parent”.

Passed by the Legislative Assembly the 31st day of January, 2020. Hon. W. McKeeva Bush Speaker Zena Merren-Chin Clerk of the Legislative Assembly