{"kind":"expression","expression":{"expr_id":"742","doc_id":"742","label":"2026 Revision","is_as_enacted":"f","commenced_on":"2026-02-05","superseded_on":null,"valid_from":"2026-02-05","valid_to":null,"is_current":"t","incorporating":"[\"SL 79\/2024 - International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2024 - LG49\/2024\/s1\"]","akn_expr_iri":"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05","akn_envelope":"{\"_canary\": {\"iri\": {\"work\": \"\/akn\/ky\/act\/2018\/45\", \"expression\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05\", \"manifestation\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05.pdf\"}, \"pdf\": {\"md5\": \"0311afd22e3500409ed034af425d3603\", \"path\": \"\/Users\/q\/kyleg-data\/working\/PRINCIPAL\/2018\/2018-0045\/2018-0045_2026 Revision.pdf\", \"pages\": 32, \"filename\": \"2018-0045_2026 Revision.pdf\"}, \"errors\": [], \"extraction\": {\"model\": null, \"stats\": {\"word_count\": 8586, \"paragraph_count\": 17, \"text_char_count\": 56133}, \"usage\": null, \"method\": \"pymupdf-text\", \"version\": \"kyleg-akn-1.0\", \"extracted_at\": \"2026-06-22\"}, \"classification\": \"text_layer\", \"validation_flags\": [], \"docai_processor_id\": null}, \"akomaNtoso\": {\"act\": {\"body\": [{\"eId\": \"sec_n1\", \"num\": null, \"text\": \"SCHEDULE Construction of words and expressions ENDNOTES Revision) INTERNATIONAL TAX CO-OPERATION (ECONOMIC SUBSTANCE) ACT (2026 Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_1\", \"num\": \"1.\", \"text\": \"Short title 1. This Act may be cited as the International Tax Co-operation (Economic Substance) Act (2026 Revision).\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_2\", \"num\": \"2.\", \"text\": \"Interpretation 2. (1) In this Act \u2014 \u201cAuthority\u201d means the Tax Information Authority designated under section 4 of the Tax Information Authority Act (2021 Revision) or a person designated by the Authority to act on behalf of the Authority; \u201cCayman Islands Monetary Authority\u201d means the Authority established as such under section 5(1) of the Monetary Authority Act (2020 Revision); \u201cdirector\u201d, in relation to an entity, means any director, member or other person in whom the management of the entity is vested and \u201cboard of directors\u201d shall be construed accordingly; \u201ceconomic substance test\u201d shall be construed in accordance with section 4; and \u201cRegistrar\u201d \u2014 (a) in the case of a company that is incorporated or registered under the Companies Act (2026 Revision), has the meaning given to that expression by section 2(1) of that Act; Revision) (b) in the case of a limited liability company that is registered under the Limited Liability Companies Act (2025 Revision), has the meaning given to that expression by section 2 of that Act; or (c) in the case of a limited liability partnership that is registered under the Limited Liability Partnership Act (2025 Revision), has the meaning given to that expression by section 2(1) of that Act. (2) In this Act, words and expressions listed in the Schedule are to be construed in accordance with that Schedule.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_3\", \"num\": \"3.\", \"text\": \"Functions of the Authority 3. Notwithstanding any other functions of the Authority under any other law, the Authority shall have the following functions \u2014 (a) to administer this Act; (b) to determine whether a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity satisfies such test; (c) to monitor compliance with this Act; and (d) any other function specified in this Act.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_4\", \"num\": \"4.\", \"text\": \"Requirement to satisfy economic substance test 4. (1) Subject to subsections (5), (6) and (7) and to regulations made under section 15, a relevant entity that carries on a relevant activity is required to satisfy the economic substance test in relation to that relevant activity. (2) Subject to subsections (3), (4) and (5), a relevant entity satisfies the economic substance test in relation to a relevant activity, if the relevant entity \u2014 (a) conducts core income generating activities in relation to that relevant activity; (b) is directed and managed in an appropriate manner in the Islands in relation to that relevant activity; and (c) having regard to the level of relevant income derived from the relevant activity carried out in the Islands \u2014 (i) has an adequate amount of operating expenditure incurred in the Islands; (ii) has an adequate physical presence (including maintaining a place of business or plant, property and equipment) in the Islands; and (iii) has an adequate number of full-time employees or other personnel with appropriate qualifications in the Islands. (3) A relevant entity complies with subsection (2)(b) if in relation to a relevant activity \u2014 Revision) (a) the relevant entity\u2019s board of directors, as a whole, has the appropriate knowledge and expertise to discharge its duties as a board of directors; (b) meetings of the board of directors are held in the Islands at adequate frequencies given the level of decision making required; (c) during a meeting of the board of directors described in paragraph (b), there is a quorum of directors present in the Islands; (d) the minutes of the meetings of the board of directors described in paragraph (b) record the making of strategic decisions of the relevant entity at the meeting; and (e) the minutes of all meetings of the board of directors and appropriate records of the relevant entity are kept in the Islands. (4) A relevant entity satisfies the economic substance test in relation to a relevant activity if its core income generating activities in relation to that relevant activity are conducted by any other person and the relevant entity is able to monitor and control the carrying out of core income generating activities by that other person. (5) A relevant entity that is only carrying on a relevant activity that is the business of a pure equity holding company is subject to a reduced economic substance test which is satisfied if the relevant entity confirms that \u2014 (a) it has complied with all applicable filing requirements under the Companies Act (2026 Revision); and (b) it has adequate human resources and adequate premises in the Islands for holding and managing equity participations in other entities. (6) A relevant entity that is carrying on a relevant activity shall satisfy the economic substance test from the date prescribed. (7) A relevant entity that is carrying on a relevant activity that is a high risk intellectual property business is presumed not to have met the economic substance test for a financial year, even if there are core income generating activities relevant to the business and the intellectual property assets being carried out in the Islands, unless the relevant entity \u2014 (a) can demonstrate that there was a high degree of control over the development, exploitation, maintenance, enhancement and protection of the intangible asset, exercised by an adequate number of full-time employees with the necessary qualifications that permanently reside and perform their activities within the Islands; and (b) provides sufficient information under section 7(4)(j) to the Authority in relation to that financial year to rebut this presumption. (8) A relevant entity that is carrying on more than one relevant activity is required to satisfy the economic substance test in relation to each relevant activity. Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_5\", \"num\": \"5.\", \"text\": \"Guidance 5. (1) The Authority shall, after private sector consultation, issue guidance on satisfying the economic substance test, including guidance as to the meaning of \u201cadequate\u201d and \u201cappropriate\u201d for the purposes of this Act. (2) A relevant entity that is required to satisfy the economic substance test shall have regard to the guidance issued under subsection (1). (3) The Authority shall publish the guidance issued under subsection (1) in the Gazette and in any other manner that the Authority considers will bring the guidance to the attention of the persons who are most likely to be affected by it. (4) The Authority may, after private sector consultation, revise guidance issued under subsection (1) from time to time and any reference to guidance includes a reference to revised guidance.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_6\", \"num\": \"6.\", \"text\": \"Determination of whether economic substance test is satisfied 6. (1) The Authority shall have the power, in accordance with this Act, regulations made under this Act and the guidance issued under section 5, to make a determination as to whether a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity satisfies such economic substance test for any financial year of the relevant entity commencing on or after the date prescribed under section 4(6), except that such a determination shall not be made later than six years after the end of such financial year. (2) The limitation period of six years under subsection (1) shall not apply if the Authority is not able to make a determination within six years after the end of a relevant entity\u2019s financial year by reason of any material misrepresentation, action taken in bad faith or fraudulent action by or on behalf of the relevant entity.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_7\", \"num\": \"7.\", \"text\": \"Requirement to provide information 7. (1) An entity shall annually notify the Authority of the following \u2014 (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; (c)  in the case of an entity that is carrying on a relevant activity and is tax resident in a jurisdiction outside the Islands \u2014 (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 Revision) (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 \u2014 (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. (2) The notification under subsection (1) shall be made at the time specified by the Authority and in the form and the manner approved by the Authority. (3) Subject to subsection (4), a relevant entity that is carrying on a relevant activity and is required to satisfy the economic substance test shall, no later than twelve months after the last day of the end of each financial year of the relevant entity commencing on or after the prescribed date, prepare and submit to the Authority a report for the purpose of the Authority\u2019s determination under section 6. (4) The report under subsection (3) shall be in the form approved by the Authority and shall include the following information with respect to the relevant entity \u2014 (a) the type of relevant activity conducted by it; (b) the amount and type of relevant income in respect of the relevant activity; (c) the amount and type of expenses and assets in respect of the relevant activity; (d) the location of the place of business or plant, property or equipment used for the relevant activity of the relevant entity in the Islands; (e) the number of full-time employees or other personnel with appropriate qualifications who are responsible for carrying on the relevant entity\u2019s relevant activity; (ea)  the name and address of any person other than the relevant entity who is conducting the relevant entity\u2019s core income generating activities in relation to its relevant activity; (f) information showing the core income generating activities in respect of the relevant activity that have been conducted; (g) a declaration as to whether or not the relevant entity satisfies the economic substance test in accordance with this Act; (h) in the case of a relevant activity that is an intellectual property business, a declaration as to whether or not it is a high risk intellectual property business and, if it is, whether or not the relevant entity will provide the information under paragraph (j) to rebut the presumption in section 4(7) within the time specified in subsection (3); Revision) (i) details of any MNE Group in respect of which the relevant entity is a Constituent Entity for the purposes of the Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations, 2017; (j) in the case of a relevant entity that is carrying on a high risk intellectual property business \u2014 (i) detailed business plans which demonstrate the commercial rationale for holding the intellectual property assets in the Islands; (ii) employee information, including level of experience, type of contracts, qualifications and duration of employment; (iii) evidence that decision making is taking place within the Islands; and (iv) any other information as may be reasonably required by the Authority to determine whether the relevant entity meets the economic substance test; and (k) such other information as may be prescribed. (5) A relevant entity shall, subject to subsection (6), provide the Authority with such additional information (including a copy of a relevant book, document or other record, or of electronically stored information) as shall be reasonably required by the Authority in making a determination under section 6. (6) The information referred to in subsection (5) shall be in the form approved by the Authority and shall be provided within a reasonable time specified by the Authority. (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. (7) The Authority may, by notice served on any person that the Authority reasonably believes to have relevant information, require that person \u2014 (a) within a reasonable time specified by the Authority in the notice, to provide the Authority with information (including a copy of a relevant book, document or other record, or of electronically stored information); or (b) at a reasonable time, during office hours, specified by the Authority, to make available to the Authority for inspection, a book, document or other record, or any electronically stored information, that is in the person\u2019s control or possession that the Authority reasonably requires in discharging its functions under this Act. (8) A relevant entity that is required to satisfy the economic substance test in relation to a relevant activity shall retain for six years after the end of a financial Revision) year, a book, document or other record, including any information stored by electronic means that relates to the information required to be provided to the Authority under this section. (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 \u2014 (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 \u2014 (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. (9) A person who, having been required under this section to provide or make available to the Authority any information (including a copy of a relevant book, document or other record, or of electronically stored information) that is in that person\u2019s possession or under that person\u2019s control \u2014 (a) without lawful excuse fails so to do, within the time specified by the Authority under this section, or by the Authority by notice; or (b) knowingly or willfully alters, destroys, mutilates, defaces, hides or removes any such information, Revision) commits an offence and is liable on summary conviction to a fine of ten thousand dollars or to imprisonment for a term of two years, or to both. (10) In this section \u201centity\u201d means \u2014 (a)  a company that is \u2014 (i)  incorporated under the Companies Act (2026 Revision); or (ii)  a limited liability company registered under the Limited Liability Companies Act (2025 Revision); (b)  a limited liability partnership that is registered in accordance with the Limited Liability Partnership Act (2025 Revision); or (c)  a company that is incorporated outside of the Islands and registered under the Companies Act (2026 Revision).\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_8\", \"num\": \"8.\", \"text\": \"Failure to satisfy economic substance test 8. (1) If the Authority determines under section 6 that a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity has failed to satisfy such economic substance test for a financial year, the Authority shall issue a notice to the relevant entity notifying the relevant entity of \u2014 (a) the Authority\u2019s determination that the relevant entity has failed to satisfy the economic substance test in relation to the relevant activity for that financial year; (b) the reasons for the determination; (c) the amount of any penalty imposed under subsection (2); (d) the date on which the penalty under subsection (2) is due being not less than twenty-eight days after the date of issue of the notice; (e) the Authority\u2019s direction as to the action to be taken by the relevant entity to satisfy the economic substance test in relation to the relevant activity and the date by which such action must be taken; and (f) the relevant entity\u2019s right of appeal under section 9. (2) The Authority shall impose a penalty of ten thousand dollars on a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity for failing to satisfy such economic substance test. (3) If, for the financial year following a financial year in which a notice was issued under subsection (1) (\u201csubsequent financial year\u201d), the Authority determines a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity has failed to satisfy the economic substance test in relation to such relevant activity, the Authority shall issue a further notice to the relevant entity notifying the relevant entity of \u2014 Revision) (a) the Authority\u2019s determination that the relevant entity has not satisfied the economic substance test in relation to the relevant activity for the subsequent financial year; (b) the reasons for the determination; (c) the amount of any penalty imposed on the relevant entity under subsection (4), in addition to the penalty previously imposed under subsection (1); (d) the date from which the penalty under subsection (4) is due, being not less than twenty-eight days after the issue of the notice; (e) the Authority shall make a report to the Registrar under paragraph (6); (f) the Authority\u2019s direction as to the action to be taken by the relevant entity to satisfy the economic substance test in relation to the relevant activity and the date by which such action must be taken; and (g) the relevant entity\u2019s right of appeal under section 9. (4) The Authority shall impose a penalty of one hundred thousand dollars on a relevant entity that is required to satisfy the economic substance test in relation to a relevant activity for failing to comply with the economic substance test in relation to that relevant activity for a subsequent financial year. (5) The Authority shall not impose a penalty under this section after the earlier of the following \u2014 (a) one year after becoming aware of the contravention; or (b) six years after the contravention occurred. (6) Following the issue of a notice under subsection (3), the Authority shall provide the Registrar with a report of the matters referred to in that notice together with any additional information (whether or not provided to the Authority under section 7). (7) A penalty under this section must be paid before the end of the period of twentyeight days commencing with the date mentioned in subsection (8). (8) That date referred to in subsection (7) is the later of \u2014 (a) the date from which the penalty is due under subsection (1)(d) or (3)(d); or (b) if a notice of appeal is given pursuant to section 9, the date on which the appeal is finally determined or withdrawn. (9) A penalty under this section 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. (10) If the Registrar receives a report under subsection (6), the Registrar shall apply to the Grand Court for an order under subsection (11). (11) If, on receiving an application under subsection (10), the Grand Court is satisfied that the relevant entity was required to satisfy the economic substance Revision) test in relation to a relevant activity and failed to satisfy such economic substance test, the Grand Court may make such order as it sees fit including \u2014 (a) an order requiring the relevant entity to take such action as specified in the order, including for the purpose of satisfying such economic substance test; or (b) in the case of a relevant entity that is \u2014 (i) a company that is registered or incorporated under the Companies Act (2026 Revision), an order that it is a defunct company to which Part 6 of that Act applies; (ii) a limited liability company that is registered under the Limited Liability Companies Act (2025 Revision), an order that it is a defunct company to which section 40 of that Act applies; or (iii) a limited liability partnership that is registered under the Limited Liability Partnership Act (2025 Revision), an order that the limited liability partnership be struck off in accordance with section 31 of that Act as if it is a limited liability partnership that the Registrar has reasonable cause to believe is not carrying on business or is not in operation.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_9\", \"num\": \"9.\", \"text\": \"Appeal 9. (1) A relevant entity that has been notified of a determination of a failure to satisfy the economic substance test and has a penalty imposed pursuant to section 8 may, within twenty-eight days after the notification, appeal against the determination and penalty to the Grand Court and such appeal shall act as a stay on the enforcement of the penalty. (2) 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 determination and penalty or substitute its own penalty for that imposed by the Authority. (3) A person upon whom a penalty is imposed may appeal against the penalty on the ground that liability to a penalty does not arise.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_10\", \"num\": \"10.\", \"text\": \"Sharing of information 10. (1) The Authority shall, in accordance with relevant international standards and scheduled agreements, provide the information provided to it under this Act in respect of a relevant entity that fails to satisfy the economic substance test in relation to a relevant activity for a financial year to \u2014 (a) the competent authority in the relevant jurisdiction in which the immediate parent, ultimate parent and ultimate beneficial owner of the relevant entity resides; and Revision) (b) if the relevant entity is incorporated outside the Islands, the competent authority of the relevant jurisdiction in which the relevant entity is incorporated. (2) In the case of a relevant entity that is carrying on a high risk intellectual property business, the Authority shall, in accordance with relevant international standards and scheduled agreements, provide the information provided to it under this Act in respect of the relevant entity to \u2014 (a) the competent authority in the relevant jurisdiction in which the immediate parent, ultimate parent and ultimate beneficial owner of the relevant entity resides; and (b) if the relevant entity is incorporated outside the Islands, the competent authority of the relevant jurisdiction in which the relevant entity is incorporated. (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 Act \u2014 (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 (c)  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 Act as appropriate. (5)  In this section \u201centity\u201d means \u2014 (a)  a company that is \u2014 (i)  incorporated under the Companies Act (2026 Revision); or (ii)  a limited liability company registered under the Limited Liability Companies Act (2025 Revision); (b)  a limited liability partnership that is registered in accordance with the Limited Liability Partnership Act (2025 Revision); or (c)  a company that is incorporated outside of the Islands and registered under the Companies Act (2026 Revision). Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_11\", \"num\": \"11.\", \"text\": \"Confidentiality 11. (1) A person who discloses any information \u2014 (a) relating to the affairs of the Authority; (b) relating to the affairs of a relevant entity; (c) relating to the affairs of any officer, customer, investor, member, client or policyholder of a relevant entity; or (d) shared by or with a competent authority or any communication related thereto, that the person has acquired in the course of the person\u2019s duties, or in the exercise of the Authority\u2019s functions, under this Act, commits an offence and is liable on summary conviction to a fine of ten thousand dollars or to imprisonment for one year, or to both, and on conviction on indictment to a fine of fifty thousand dollars, or to imprisonment for a term of three years, or to both. (2) Subsection (1) shall not apply to a disclosure \u2014 (a) lawfully made in accordance with section 3(1) of the Confidential Information Disclosure Act, 2016 [Law 23 of 2016]; (b) if the information disclosed is or has been available to the public from any other source; (c) where the information disclosed is in a summary or in statistics expressed in a manner that does not enable the identity of any relevant entity, or of any officer, customer, investor, member, client or policyholder of a relevant entity to which the information relates to be ascertained; or (d) by the Authority under this Act.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_12\", \"num\": \"12.\", \"text\": \"Immunity 12. Neither the Authority, nor any person designated to act on the Authority\u2019s behalf, shall be liable in damages for anything done or omitted in the discharge of their functions under this Act unless it is shown that the act or omission was in bad faith.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_13\", \"num\": \"13.\", \"text\": \"Misleading information 13. (1) A person shall not knowingly or wilfully supply false or misleading information to the Authority under this Act. (2) A person who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine of ten thousand dollars or to imprisonment for a term of five years, or to both. Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_14\", \"num\": \"14.\", \"text\": \"Offence by officers of a body corporate 14. (1) Where an offence under this Act that has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other officer of the body corporate, or any person who was purporting to act in such a capacity, the officer or any person purporting to act in that capacity, as well as the body corporate, commits that offence and is liable to be proceeded against and punished accordingly. (2) Where the affairs of a body corporate are managed by its members, subsection (1) shall apply in relation to defaults of a member in connection with the member\u2019s functions of management as if the member were a director of the body corporate.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_15\", \"num\": \"15.\", \"text\": \"Regulations 15. (1) The Cabinet may make regulations \u2014 (a) prescribing anything that may be prescribed under this Act; (b) amending the Schedule; (c) further defining the scope of relevant entities that are required to satisfy the economic substance test; (d) further defining the scope of relevant activities; (f) providing for such matters as may be necessary or convenient for carrying out or giving effect to this Act and its administration. (2) Regulations made under this Act may \u2014 (a) make different provisions in relation to different cases or circumstances; or (b) contain such transitional, consequential, incidental or supplementary provisions as appear to the Cabinet to be necessary or expedient for the purposes of such regulations.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_16\", \"num\": \"16.\", \"text\": \"Savings, transitional and consequential provisions 16. (1) Notwithstanding sections 4 and 15, the Cabinet may make regulations to provide for such savings, transitional and consequential provisions to have effect in connection with the coming into operation of any provision of this Act as are necessary or expedient. (2) Regulations made under subsection (1) may be given retrospective operation to a day not earlier than the day that this Act comes into force. Revision) SCHEDULE SCHEDULE (section 2(2)) Construction of words and expressions 1. (1) In this Act \u2014 \u201cadequate\u201d shall be construed in accordance with the guidance issued under section 5; \u201cappropriate\u201d shall be construed in accordance with the guidance issued under section 5; \u201carrangement\u201d includes \u2014 (a) a scheme, agreement or understanding, whether or not it is legally enforceable; and (b) a convention, custom or practice of any kind, but something does not count as an arrangement unless there is at least some degree of stability about it (whether by its nature or terms, the time it has been in existence or otherwise); \u201cbanking business\u201d has the meaning given to that expression by section 2 of the Banks and Trust Companies Act (2025 Revision); \u201ccarrying on business in the Islands\u201d has the same meaning as \u201ccarry on business in the Islands\u201d in section 2(2) of the Local Companies (Control) Act (2025 Revision) except that references in that definition to \u201ccompany\u201d and \u201cexempted company\u201d shall be interpreted to include \u201cpartnership\u201d; \u201ccore income generating activities\u201d means activities that are of central importance to a relevant entity in terms of generating relevant income and, must be carried on in the Cayman Islands including \u2014 (a) in relation to banking business \u2014 (i) raising funds, managing risk including credit, currency and interest risk; (ii) taking hedging positions; (iii) providing loans, credit or other financial services to customers; (iv) managing capital and preparing reports or returns, or both, to investors or the Cayman Islands Monetary Authority, or both; (b) in relation to a distribution and service centre business \u2014 (i) transporting and storing goods, components and materials; (ii) managing stocks; (iii) taking orders; SCHEDULE Revision) (iv) providing consulting or other administrative services; (c) in relation to financing and leasing business \u2014 (i) negotiating or agreeing funding terms; (ii) identifying and acquiring assets to be leased; (iii) setting the terms and duration of financing or leasing; (iv) monitoring and revising financing or leasing agreements and managing risks associated with such financing or leasing agreements; (d) in relation to fund management business \u2014 (i) taking decisions on the holding and selling of investments; (ii) calculating risk and reserves; (iii) taking decisions on currency or interest fluctuations and hedging positions; (iv) preparing reports or returns, or both, to investors or the Cayman Islands Monetary Authority, or both; (e) in relation to headquarters business \u2014 (i) taking relevant management decisions; (ii) incurring expenditures on behalf of Group entities; (iii) co-ordinating Group activities; (f) in relation to insurance business \u2014 (i) predicting or calculating risk or oversight of prediction or calculation of risk; (ii) insuring or re-insuring against risk; (iii) preparing reports or returns, or both, to investors or the Cayman Islands Monetary Authority, or both; (g) in relation to intellectual property business \u2014 (i) where the intellectual property asset is a \u2014 (A) patent or an asset that is similar to a patent, research and development; or (B) non-trade intangible (including a trademark), branding, marketing and distribution; (ii) in exceptional cases, except if the relevant activity is a high risk intellectual property business, other core income generating activities relevant to the business and the intellectual property assets, which may include \u2014 (A) taking strategic decisions and managing (as well as bearing) the principal risks related to development and subsequent exploitation of the intangible asset generating income; Revision) SCHEDULE (B) taking the strategic decisions and managing (as well as bearing) the principal risks relating to acquisition by third parties and subsequent exploitation and protection of the intangible asset; (C) carrying on the underlying trading activities through which the intangible assets are exploited leading to the generation of income from third parties; (h) in relation to shipping business \u2014 (i) managing crew (including hiring, paying and overseeing crew members); (ii) overhauling and maintaining ships; (iii) overseeing and tracking deliveries; (iv) determining what goods to order and when to deliver them, organising and overseeing voyages; or (i) in relation to holding company business, all activities related to that business; \u201ccompetent authority\u201d means, for each respective jurisdiction, the persons and authorities authorised pursuant to a scheduled agreement; \u201cConsolidated Financial Statements\u201d means the financial statements of a Group in which the assets, liabilities, income, expenses and cash flows of the ultimate parent and the Constituent Entities are presented as those of a single economic entity; \u201cConstituent Entity\u201d means \u2014 (a) any separate business unit of a Group that is included in the Consolidated Financial Statements of the Group for financial reporting purposes, or would be so included if equity interests in such business unit of a Group were traded on a public securities exchange; (b) any such business unit that is excluded from the Group\u2019s Consolidated Financial Statements solely on size or materiality grounds; and (c) any permanent establishment of any separate business unit of the Group included in (a) or (b) provided the business unit prepares a separate financial statement for such permanent establishment for financial reporting, regulatory, tax reporting, or internal management control purposes; \u201cdistribution and service centre business\u201d means the business of either or both of the following \u2014 (a) purchasing from an entity in the same Group \u2014 (i) component parts or materials for goods; or (ii) goods ready for sale, and reselling such component parts, materials or goods outside the Islands; SCHEDULE Revision) (b) providing services to an entity in the same Group in connection with the business outside the Islands, but does not include any activity included in any other relevant activity except holding company business; \u201cdomestic company\u201d means a company that is not part of an MNE Group and that is \u2014 (a) only carrying on business in the Islands and which complies with section 4(1) of the Local Companies (Control) Act (2025 Revision) or section 3(a) of the Trade and Business Licensing Act (2026 Revision); or (b) a company referred to in section 80 of the Companies Act (2026 Revision); \u201cfinancing and leasing business\u201d means the business of providing credit facilities for any kind of consideration to another person but does not include financial leasing of land or an interest in land, banking business, fund management business or insurance business; \u201cfund management business\u201d means the business of managing securities as set out in paragraph 3 of Schedule 2 to the Securities Investment Business Act (2020 Revision) carried on by a relevant entity licensed or otherwise authorised to conduct business under that Act for an investment fund; \u201cGroup\u201d means a collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange; \u201cheadquarters business\u201d means the business of providing any of the following services to an entity in the same Group \u2014 (a) the provision of senior management; (b) the assumption or control of material risk for activities carried out by any of those entities in the same Group; or (c) the provision of substantive advice in connection with the assumption or control of risk referred to in paragraph (b), but does not include banking business, financing and leasing business, fund management business, intellectual property business, holding company business or insurance business; \u201chigh risk intellectual property business\u201d means an intellectual property business carried on by an entity that  \u2014 (i) did not create the intellectual property in an intellectual property asset that it holds for the purposes of its business, (ii) acquired the intellectual property asset \u2014 (A) from an entity in the same Group; or Revision) SCHEDULE (B) in consideration for funding research and development by another person situated in a country or territory other than the Islands; and (iii) licences the intellectual property asset to one or more entities in the same Group or otherwise generates income from the asset in consequence of activities (such as facilitating sale agreements) performed by entities in the same Group; \u201cholding company business\u201d means the business of a pure equity holding company; \u201cimmediate parent\u201d, 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; \u201cinsurance business\u201d has the meaning given to that expression by section 2 of the Insurance Act, 2010 [Law 32 of 2010]; \u201cintellectual property business\u201d means the business of holding, exploiting or receiving income from intellectual property assets; \u201cintellectual property asset\u201d means an intellectual property right including a copyright, design right, patent and trademark; \u201cinvestment fund\u201d means an entity whose principal business is the issuing of investment interests to raise funds or pool investor funds with the aim of enabling a holder of such an investment interest to benefit from the profits or gains from the entity\u2019s acquisition, holding, management or disposal of investments and includes any entity through which an investment fund directly or indirectly invests or operates (but not an entity that is itself the ultimate investment held), but does not include a person licenced under the Banks and Trust Companies Act (2025 Revision) or the Insurance Act, 2010 [Law 32 of 2010], or a person registered under the Building Societies Act (2020 Revision) or the Friendly Societies Act (1998 Revision); \u201cinvestment fund business\u201d means the business of operating as an investment fund; \u201cinvestment interests\u201d means a share, trust unit, partnership interest or other right that carries an entitlement to participate in the profits or gains of the entity; \u201cjoint arrangement\u201d means an arrangement between the holders of shares or rights that they will exercise all or substantially all the rights conferred by their respective shares or rights jointly in a way that is pre-determined by the arrangement; \u201clocal partnership\u201d means a partnership as defined under section 3 of the Partnership Act (2025 Revision) that is not part of an MNE Group and \u2014 (a)  that is only carrying on business in the Islands and is empowered by its partnership agreement to carry on business in the Islands; and SCHEDULE Revision) (b)  that \u2014 (i)  is licensed under the Trade and Business Licensing Act (2026 Revision) and, at the relevant time, is carrying on such business in accordance with the terms and conditions imposed in such licence and not otherwise; (ii)  is operating under a franchise granted by the government; or (iii)  complies with section 3(a) of the Trade and Business Licensing Act (2026 Revision); \u201cMNE Group\u201d means any Group that includes two or more enterprises for which the tax residence is in different jurisdictions or includes an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction; \u201cpleasure yacht\u201d has the meaning given to that expression by section 11(6) of the Merchant Shipping Act, 2024 [Act 1 of 2024]; \u201cpure equity holding company\u201d means an entity that only holds equity participations in other entities and only earns dividends and capital gains; \u201cRegistrar\u201d\u2014 (a) in relation to a partnership means the Registrar of Limited Partnerships under section 48 of the Partnership Act (2025 Revision); (b)  in relation to an exempted limited partnership means the Registrar of Exempted Limited Partnerships under section 8 of the Exempted Limited Partnership Act (2025 Revision); or (c)  in relation to a foreign limited partnership registered under section 42 of the Exempted Limited Partnership Act (2025 Revision), means the Registrar of Exempted Limited Partnerships under section 8 of the Exempted Limited Partnership Act (2025 Revision); \u201crelevant activity\u201d means \u2014 (a) banking business; (b) distribution and service centre business; (c) financing and leasing business; (d) fund management business; (e) headquarters business; (f) holding company business; (g) insurance business; (h) intellectual property business; or (i) shipping business; but does not include investment fund business; Revision) SCHEDULE \u201crelevant entity\u201d means \u2014 (a) a company, other than a domestic company, that is \u2014 (i) incorporated under the Companies Act (2026 Revision); or (ii) a limited liability company registered under the Limited Liability Companies Act (2025 Revision); (aa)  a partnership as defined under section 3 of the Partnership Act (2025 Revision), except where the partnership is a local partnership; (ab)  an exempted limited partnership as defined under section 2 of the Exempted Limited Partnership Act (2025 Revision); (ac)  a foreign limited partnership registered under section 42 of the Exempted Limited Partnership Act (2025 Revision); (b) a limited liability partnership that is registered in accordance with the Limited Liability Partnership Act (2025 Revision); (c) a company that is incorporated outside of the Islands and registered under the Companies Act (2026 Revision), but does not include \u2014 (i) an investment fund; or (ii) an entity that is tax resident outside the Islands; \u201crelevant income\u201d, in relation to an entity, means all of that entity\u2019s gross income from its relevant activities and recorded in its books and records under applicable accounting standards; \u201crelevant jurisdiction\u201d means a country or territory that is a party to a scheduled agreement; \u201cscheduled agreement\u201d means an agreement that is scheduled to the Tax Information Authority Act (2021 Revision) in accordance with the provisions of that Act; \u201cseafarer recruitment and placement service\u201d has the meaning given to that expression by the Maritime Labour Convention, 2006; \u201cshipping business\u201d means any of the following activities involving the operation of a ship anywhere in the world other than in the territorial waters of the Islands or between the Islands \u2014 (a) the business of transporting, by sea, passengers or animals, goods or mail for a charge; (b) the renting or chartering of ships for the purpose described in paragraph (a); (c) the sale of travel tickets and ancillary ticket related services connected with the operation of a ship; SCHEDULE Revision) (d) the use, maintenance or rental of containers, including trailers and other vehicles or equipment for the transport of containers, used for the transport of anything by sea; or (e) the functioning as a private seafarer recruitment and placement service, but does not include a holding company business or the owning, operating or chartering of a pleasure yacht; \u201csubsidiary company\u201d means, with respect to another company, a company of which that other company is the immediate parent; \u201cterritorial waters\u201d has the same meaning given to \u201cterritorial sea\u201d in the Cayman Islands (Territorial Sea) Order 1989 of the United Kingdom [UKSI 1989 No. 2397]; \u201cultimate beneficial owner\u201d \u2014 (a)  in relation to \u2014 (i)  a company that is incorporated or registered under the Companies Act (2026 Revision); (ii)  a limited liability company that is registered under the Limited Liability Companies Act (2025 Revision); (iii)  an exempted limited partnership as defined under section 2 of the Exempted Limited Partnership Act (2025 Revision); (iv)  a limited liability partnership that is registered under the Limited Liability Partnership Act (2025 Revision); or (v)  a limited partnership registered in accordance with section 47 of the Partnership Act (2025 Revision), has the same meaning as \u201cbeneficial owner\u201d in section 4 of the Beneficial Ownership Transparency Act (2026 Revision); and (b)  in relation to \u2014 (i)  a partnership as defined under section 3 of the Partnership Act (2025 Revision); or (ii)  a foreign limited partnership registered under section 42 of the Exempted Limited Partnership Act (2025 Revision), has the same meaning as \u201cbeneficial owner\u201d as it relates to exempted limited partnerships, limited liability partnerships and limited partnerships in section 4 of the Beneficial Ownership Transparency Act (2026 Revision). \u201cultimate parent\u201d means a Constituent Entity of a Group that meets the following criteria \u2014 (a) it owns directly or indirectly a sufficient interest in one or more other Constituent Entities of the Group such that it is required to prepare Consolidated Financial Statements under accounting principles generally Revision) SCHEDULE applied in its jurisdiction of tax residence, or would be so required if its equity interests were traded on a public securities exchange in its jurisdiction of tax residence; and (b) there is no other Constituent Entity of the Group that owns directly or indirectly an interest described in paragraph (a) in the first mentioned Constituent Entity. (2) Notwithstanding sections 7(10) and 10(5) of this Act, a partnership under the Partnership Act (2025 Revision), an exempted limited partnership under section 2 of the Exempted Limited Partnership Act (2025 Revision) or a foreign limited partnership under section 42 of the Exempted Limited Partnership Act (2025 Revision) is, from the 20th June, 2021, the commencement of the International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021 [SL 48 of 2021], an entity for the purposes of sections 7 and 10 of this Act. Publication in consolidated and revised form authorised by the Cabinet this 28th day of January, 2026. Kim Bullings Clerk of the Cabinet Revision) ENDNOTES ENDNOTES Table of Legislation history: SL # Act\/Law # Legislation Commencement Gazette 79\/2024 International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2024 23-Dec-2024 LG49\/2024\/s1 International Tax Co-operation (Economic Substance) Act (2024 Revision) 8-Feb-2024 LG7\/2024\/s2 48\/2021 International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021 20-Jun-2021 LG38\/2021\/s1 International Tax Co-operation (Economic Substance) Act (2021 Revision) 5-Feb-2021 LG12\/2021\/s5 56\/2020 Citation of Acts of Parliament Act, 2020 3-Dec-2020 LG89\/2020\/s1 90\/2020 International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2020 10-Jul-2020 LG50\/2020\/s2 7\/2020 International Tax Co-operation (Economic Substance) (Amendment) Law, 2020 12-Feb-2020 LG10\/2020\/s4 International Tax Co-operation (Economic Substance) Law (2020 Revision) 14-Jan-2020 LG5\/2020\/s3 33\/2019 International Tax Co-operation (Economic Substance) (Amendment of Schedule) (No.3) Regulations, 2019 10-Sep-2019 LG31\/2019\/s1 20\/2019 International Tax Co-operation (Economic Substance) (Amendment of Schedule) (No.2) Regulations, 2019 30-Apr-2019 LG12\/2019\/s1 10\/2019 International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2019 22-Feb-2019 LG5\/2019\/s1 45\/2018 International Tax Co-operation (Economic Substance) Law, 2018 1-Jan-2019 GE98\/2018\/s2 ENDNOTES Revision) Revision) ENDNOTES ENDNOTES Revision) (Price: $6.40)\", \"element\": \"section\", \"heading\": null}], \"meta\": {\"notes\": null, \"workflow\": null, \"lifecycle\": {\"source\": \"#cilegis\", \"eventRef\": [{\"eId\": \"e_commence_2026_02_05\", \"date\": \"2026-02-05\", \"type\": \"generation\", \"source\": \"#cilegis\"}]}, \"references\": {\"source\": \"#canary\", \"TLCRole\": [], \"TLCEvent\": [{\"eId\": \"ev_commencement\", \"href\": 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\"2018-0045\"}], \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRnumber\": \"45 of 2018\", \"FRBRcountry\": \"ky\", \"FRBRsubtype\": \"principal\"}, \"FRBRExpression\": {\"FRBRuri\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05\", \"FRBRdate\": [{\"date\": \"2026-02-05\", \"name\": \"generation\"}], \"FRBRthis\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05\/!main\", \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRlanguage\": \"eng\"}, \"FRBRManifestation\": {\"FRBRuri\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05.xml\", \"FRBRdate\": [{\"date\": \"2026-06-22\", \"name\": \"generation\"}], \"FRBRthis\": \"\/akn\/ky\/act\/2018\/45\/eng@2026-02-05.xml\", \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRformat\": \"application\/xml\"}}}, \"name\": \"act\", \"header\": {\"title\": \"International Tax Co-operation (Economic Substance) Act\", \"actNumber\": \"45 of 2018\", \"longTitle\": null}}, \"doc\": null, \"bill\": null, \"judgment\": null}}","akn_full_text":"CAYMAN ISLANDS\n\nINTERNATIONAL TAX CO-OPERATION\n(ECONOMIC SUBSTANCE) ACT\n(2026 Revision)\n\nSupplement No. 10 published with Legislation Gazette No. 7 dated 5th February, 2026.\n\u2000\n\nPage 2\nRevised as at 31st December, 2025\nc\n\nPUBLISHING DETAILS\nLaw 45 of 2018 consolidated with Laws 7 of 2020 and 56 of 2020 and with the\nInternational Tax Co-operation (Economic Substance) (Amendment of Schedule)\nRegulations, 2019 (SL 10 of 2019), the International Tax Co-operation (Economic\nSubstance) (Amendment of Schedule) (No. 2) Regulations, 2019 (SL 20 of 2019), the\nInternational Tax Co-operation (Economic Substance) (Amendment of Schedule) (No.3)\nRegulations, 2019 (SL 33 of 2019), the International Tax Co-operation (Economic\nSubstance) (Amendment of Schedule) Regulations, 2020 (SL 90 of 2020), the International\nTax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021 (SL\n48 of 2021), and the International Tax Co-operation (Economic Substance) (Amendment\nof Schedule) Regulations, 2024 (SL 79 of 2024).\n\nOriginally enacted \u2014\nLaw 45 of 2018-17th December, 2018\nLaw 7 of 2020-31st January, 2020\nAct 56 of 2020-7th December, 2020.\n\nOriginally made \u2014\nRegulations, 2019-22nd February, 2019\nRegulations (No. 2), 2019-30th April, 2019\nRegulations (No. 3), 2019-10th September, 2019\nRegulations, 2020-9th July, 2020\nRegulations, 2021-29th June, 2021\nRegulations, 2024-20th December, 2024.\n.\n\nRevised under the authority of the Law Revision Act (2020 Revision).\n\nConsolidated and revised this 31st December, 2025.\n\nNote (not forming part of this Act): This revision replaces the 2024 Revision which\nshould now be discarded.\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nArrangement of Sections\n\nc\nRevised as at 31st December, 2025\nPage 3\n\nCAYMAN ISLANDS\n\nINTERNATIONAL TAX CO-OPERATION\n(ECONOMIC SUBSTANCE) ACT\n(2026 Revision)\nArrangement of Sections\nSection\nPage\n1.\nShort title ...................................................................................................................................5\n2.\nInterpretation .............................................................................................................................5\n3.\nFunctions of the Authority ..........................................................................................................6\n4.\nRequirement to satisfy economic substance test .......................................................................6\n5.\nGuidance ...................................................................................................................................8\n6.\nDetermination of whether economic substance test is satisfied ..................................................8\n7.\nRequirement to provide information ...........................................................................................8\n8.\nFailure to satisfy economic substance test ............................................................................... 12\n9.\nAppeal ..................................................................................................................................... 14\n10.\nSharing of information .............................................................................................................. 14\n11.\nConfidentiality .......................................................................................................................... 16\n12.\nImmunity .................................................................................................................................. 16\n13.\nMisleading information ............................................................................................................. 16\n14.\nOffence by officers of a body corporate.................................................................................... 17\n15.\nRegulations ............................................................................................................................. 17\n16.\nSavings, transitional and consequential provisions .................................................................. 17\nSCHEDULE\n19\nConstruction of words and expressions\n19\nENDNOTES\n29\nTable of Legislation history: ............................................................................................................... 29\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 1\n\nc\nRevised as at 31st December, 2025\nPage 5\n\nCAYMAN ISLANDS\n\nINTERNATIONAL TAX CO-OPERATION\n(ECONOMIC SUBSTANCE) ACT\n(2026 Revision)\n\n1.\nShort title\n1.\nThis Act may be cited as the International Tax Co-operation (Economic Substance)\nAct (2026 Revision).\n2.\nInterpretation\n2.\n(1) In this Act \u2014\n \u201cAuthority\u201d means the Tax Information Authority designated under section 4\nof the Tax Information Authority Act (2021 Revision) or a person designated by\nthe Authority to act on behalf of the Authority;\n\u201cCayman Islands Monetary Authority\u201d means the Authority established as\nsuch under section 5(1) of the Monetary Authority Act (2020 Revision);\n\u201cdirector\u201d, in relation to an entity, means any director, member or other person\nin whom the management of the entity is vested and \u201cboard of directors\u201d shall\nbe construed accordingly;\n\u201ceconomic substance test\u201d shall be construed in accordance with section 4; and\n\u201cRegistrar\u201d \u2014\n(a)\nin the case of a company that is incorporated or registered under the\nCompanies Act (2026 Revision), has the meaning given to that expression\nby section 2(1) of that Act;\n\nSection 3\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 6\nRevised as at 31st December, 2025\nc\n\n(b) in the case of a limited liability company that is registered under the\nLimited Liability Companies Act (2025 Revision), has the meaning given\nto that expression by section 2 of that Act; or\n(c)\nin the case of a limited liability partnership that is registered under the\nLimited Liability Partnership Act (2025 Revision), has the meaning given\nto that expression by section 2(1) of that Act.\n(2) In this Act, words and expressions listed in the Schedule are to be construed in\naccordance with that Schedule.\n3.\nFunctions of the Authority\n3.\nNotwithstanding any other functions of the Authority under any other law, the\nAuthority shall have the following functions \u2014\n(a)\nto administer this Act;\n(b) to determine whether a relevant entity that is required to satisfy the\neconomic substance test in relation to a relevant activity satisfies such test;\n(c)\nto monitor compliance with this Act; and\n(d) any other function specified in this Act.\n4.\nRequirement to satisfy economic substance test\n4.\n(1) Subject to subsections (5), (6) and (7) and to regulations made under section 15,\na relevant entity that carries on a relevant activity is required to satisfy the\neconomic substance test in relation to that relevant activity.\n(2) Subject to subsections (3), (4) and (5), a relevant entity satisfies the economic\nsubstance test in relation to a relevant activity, if the relevant entity \u2014\n(a)\nconducts core income generating activities in relation to that relevant\nactivity;\n(b) is directed and managed in an appropriate manner in the Islands in relation\nto that relevant activity; and\n(c)\nhaving regard to the level of relevant income derived from the relevant\nactivity carried out in the Islands \u2014\n(i)\nhas an adequate amount of operating expenditure incurred in the\nIslands;\n(ii) has an adequate physical presence (including maintaining a place of\nbusiness or plant, property and equipment) in the Islands; and\n(iii) has an adequate number of full-time employees or other personnel\nwith appropriate qualifications in the Islands.\n(3) A relevant entity complies with subsection (2)(b) if in relation to a relevant\nactivity \u2014\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 4\n\nc\nRevised as at 31st December, 2025\nPage 7\n\n(a)\nthe relevant entity\u2019s board of directors, as a whole, has the appropriate\nknowledge and expertise to discharge its duties as a board of directors;\n(b) meetings of the board of directors are held in the Islands at adequate\nfrequencies given the level of decision making required;\n(c)\nduring a meeting of the board of directors described in paragraph (b), there\nis a quorum of directors present in the Islands;\n(d) the minutes of the meetings of the board of directors described in\nparagraph (b) record the making of strategic decisions of the relevant\nentity at the meeting; and\n(e)\nthe minutes of all meetings of the board of directors and appropriate\nrecords of the relevant entity are kept in the Islands.\n(4) A relevant entity satisfies the economic substance test in relation to a relevant\nactivity if its core income generating activities in relation to that relevant activity\nare conducted by any other person and the relevant entity is able to monitor and\ncontrol the carrying out of core income generating activities by that other\nperson.\n(5) A relevant entity that is only carrying on a relevant activity that is the business\nof a pure equity holding company is subject to a reduced economic substance\ntest which is satisfied if the relevant entity confirms that \u2014\n(a)\nit has complied with all applicable filing requirements under the\nCompanies Act (2026 Revision); and\n(b) it has adequate human resources and adequate premises in the Islands for\nholding and managing equity participations in other entities.\n(6) A relevant entity that is carrying on a relevant activity shall satisfy the economic\nsubstance test from the date prescribed.\n(7) A relevant entity that is carrying on a relevant activity that is a high risk\nintellectual property business is presumed not to have met the economic\nsubstance test for a financial year, even if there are core income generating\nactivities relevant to the business and the intellectual property assets being\ncarried out in the Islands, unless the relevant entity \u2014\n(a)\ncan demonstrate that there was a high degree of control over the\ndevelopment, exploitation, maintenance, enhancement and protection of\nthe intangible asset, exercised by an adequate number of full-time\nemployees with the necessary qualifications that permanently reside and\nperform their activities within the Islands; and\n(b) provides sufficient information under section 7(4)(j) to the Authority in\nrelation to that financial year to rebut this presumption.\n(8) A relevant entity that is carrying on more than one relevant activity is required\nto satisfy the economic substance test in relation to each relevant activity.\n\nSection 5\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 8\nRevised as at 31st December, 2025\nc\n\n5.\nGuidance\n5.\n(1) The Authority shall, after private sector consultation, issue guidance on\nsatisfying the economic substance test, including guidance as to the meaning of\n\u201cadequate\u201d and \u201cappropriate\u201d for the purposes of this Act.\n (2) A relevant entity that is required to satisfy the economic substance test shall\nhave regard to the guidance issued under subsection (1).\n(3) The Authority shall publish the guidance issued under subsection (1) in the\nGazette and in any other manner that the Authority considers will bring the\nguidance to the attention of the persons who are most likely to be affected by it.\n(4) The Authority may, after private sector consultation, revise guidance issued\nunder subsection (1) from time to time and any reference to guidance includes\na reference to revised guidance.\n6.\nDetermination of whether economic substance test is satisfied\n6.\n(1) The Authority shall have the power, in accordance with this Act, regulations\nmade under this Act and the guidance issued under section 5, to make a\ndetermination as to whether a relevant entity that is required to satisfy the\neconomic substance test in relation to a relevant activity satisfies such economic\nsubstance test for any financial year of the relevant entity commencing on or\nafter the date prescribed under section 4(6), except that such a determination\nshall not be made later than six years after the end of such financial year.\n (2) The limitation period of six years under subsection (1) shall not apply if the\nAuthority is not able to make a determination within six years after the end of a\nrelevant entity\u2019s financial year by reason of any material misrepresentation,\naction taken in bad faith or fraudulent action by or on behalf of the relevant\nentity.\n7.\nRequirement to provide information\n7.\n(1) An entity shall annually notify the Authority of the following \u2014\n(a)  whether or not it is carrying on a relevant activity;\n(b)  if it is carrying on a relevant activity, whether or not it is a relevant entity;\n(c)  in the case of an entity that is carrying on a relevant activity and is tax\nresident in a jurisdiction outside the Islands \u2014\n(i)  the name and address of its immediate parent, ultimate parent and\nultimate beneficial owner and any other information reasonably\nrequired to identify its immediate parent, ultimate parent and ultimate\nbeneficial owner;\n(ii)  the date of the end of its financial year; and\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 7\n\nc\nRevised as at 31st December, 2025\nPage 9\n\n(iii)  the jurisdiction in which the entity is claiming to be tax resident and\nany other information as may reasonably be required to support that\nclaim;\n(d)  in the case of a relevant entity that is carrying on a relevant activity \u2014\n(i)  the date of the end of its financial year; and\n(ii)  the name and address of the officer who is responsible for providing\ninformation to the Authority,\nand shall provide appropriate evidence to support the information provided in\nthe notification as may reasonably be required by the Authority.\n(2) The notification under subsection (1) shall be made at the time specified by the\nAuthority and in the form and the manner approved by the Authority.\n(3) Subject to subsection (4), a relevant entity that is carrying on a relevant activity\nand is required to satisfy the economic substance test shall, no later than twelve\nmonths after the last day of the end of each financial year of the relevant entity\ncommencing on or after the prescribed date, prepare and submit to the Authority\na report for the purpose of the Authority\u2019s determination under section 6.\n(4) The report under subsection (3) shall be in the form approved by the Authority\nand shall include the following information with respect to the relevant entity \u2014\n(a)\nthe type of relevant activity conducted by it;\n(b) the amount and type of relevant income in respect of the relevant activity;\n(c)\nthe amount and type of expenses and assets in respect of the relevant\nactivity;\n(d) the location of the place of business or plant, property or equipment used\nfor the relevant activity of the relevant entity in the Islands;\n(e)\nthe number of full-time employees or other personnel with appropriate\nqualifications who are responsible for carrying on the relevant entity\u2019s\nrelevant activity;\n(ea)  the name and address of any person other than the relevant entity who is\nconducting the relevant entity\u2019s core income generating activities in\nrelation to its relevant activity;\n(f)\ninformation showing the core income generating activities in respect of the\nrelevant activity that have been conducted;\n(g) a declaration as to whether or not the relevant entity satisfies the economic\nsubstance test in accordance with this Act;\n(h) in the case of a relevant activity that is an intellectual property business, a\ndeclaration as to whether or not it is a high risk intellectual property\nbusiness and, if it is, whether or not the relevant entity will provide the\ninformation under paragraph (j) to rebut the presumption in section 4(7)\nwithin the time specified in subsection (3);\n\nSection 7\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 10\nRevised as at 31st December, 2025\nc\n\n(i)\ndetails of any MNE Group in respect of which the relevant entity is a\nConstituent Entity for the purposes of the Tax Information Authority\n(International\nTax\nCompliance)\n(Country-By-Country\nReporting)\nRegulations, 2017;\n(j)\nin the case of a relevant entity that is carrying on a high risk intellectual\nproperty business \u2014\n(i)\ndetailed business plans which demonstrate the commercial rationale\nfor holding the intellectual property assets in the Islands;\n(ii) employee information, including level of experience, type of\ncontracts, qualifications and duration of employment;\n(iii) evidence that decision making is taking place within the Islands; and\n(iv) any other information as may be reasonably required by the\nAuthority to determine whether the relevant entity meets the\neconomic substance test; and\n(k) such other information as may be prescribed.\n(5) A relevant entity shall, subject to subsection (6), provide the Authority with\nsuch additional information (including a copy of a relevant book, document or\nother record, or of electronically stored information) as shall be reasonably\nrequired by the Authority in making a determination under section 6.\n(6) The information referred to in subsection (5) shall be in the form approved by\nthe Authority and shall be provided within a reasonable time specified by the\nAuthority.\n(6A) Where under section 4(4), a person is conducting core income generating\nactivities in relation to the relevant activity of a relevant entity, that person may\nverify the information provided to the Authority under subsection (4) within\nthirty days after the day on which the information is provided.\n(7) The Authority may, by notice served on any person that the Authority\nreasonably believes to have relevant information, require that person \u2014\n(a)\nwithin a reasonable time specified by the Authority in the notice, to\nprovide the Authority with information (including a copy of a relevant\nbook, document or other record, or of electronically stored\ninformation); or\n(b) at a reasonable time, during office hours, specified by the Authority, to\nmake available to the Authority for inspection, a book, document or other\nrecord, or any electronically stored information,\nthat is in the person\u2019s control or possession that the Authority reasonably\nrequires in discharging its functions under this Act.\n(8) A relevant entity that is required to satisfy the economic substance test in\nrelation to a relevant activity shall retain for six years after the end of a financial\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 7\n\nc\nRevised as at 31st December, 2025\nPage 11\n\nyear, a book, document or other record, including any information stored by\nelectronic means that relates to the information required to be provided to the\nAuthority under this section.\n(8A) Where a relevant entity that is required to satisfy the economic substance test\nfails to prepare and submit to the Authority the report required under subsection\n(3) within the time specified in that subsection, the Authority shall by notice in\nwriting impose a penalty of five thousand dollars and an additional penalty of\nfive hundred dollars for each day during which the failure to comply continues.\n(8B) The Authority shall not impose a penalty under subsection (8A) after the earlier\nof the following \u2014\n(a)  one year after becoming aware of the contravention; or\n(b)  six years after the contravention occurred.\n(8C) A penalty under subsection (8A) must be paid before the end of the period of\nthirty days commencing with the date mentioned in subsection (8D).\n(8D) That date referred to in subsection (8C) is the later of \u2014\n(a)  the date from which the penalty is due under subsection (8A); or\n(b)  if a notice of appeal is given under subsection (8F), the date on which the\nappeal is finally determined or withdrawn.\n(8E) A penalty under subsection (8A) shall be paid into the general revenue of the\nIslands and may be recovered as a civil debt due to the general revenue of the\nIslands.\n(8F) A relevant entity that has a penalty imposed pursuant to subsection (8A) may,\nwithin thirty days after the notice is given under that subsection, appeal against\nthe penalty to the Grand Court and such appeal shall act as a stay on the\nenforcement of the penalty.\n(8G) A relevant entity upon whom a penalty is imposed under subsection (8A) may\nappeal against the penalty on the ground that liability to a penalty does not arise.\n(8H) An appeal under this section may be made on questions of law or fact or both\nand the Grand Court may affirm or reverse the penalty or substitute its own\npenalty for that imposed by the Authority.\n(9) A person who, having been required under this section to provide or make\navailable to the Authority any information (including a copy of a relevant book,\ndocument or other record, or of electronically stored information) that is in that\nperson\u2019s possession or under that person\u2019s control \u2014\n(a)\nwithout lawful excuse fails so to do, within the time specified by the\nAuthority under this section, or by the Authority by notice; or\n(b) knowingly or willfully alters, destroys, mutilates, defaces, hides or\nremoves any such information,\n\nSection 8\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 12\nRevised as at 31st December, 2025\nc\n\ncommits an offence and is liable on summary conviction to a fine of ten\nthousand dollars or to imprisonment for a term of two years, or to both.\n(10) In this section \u201centity\u201d means \u2014\n(a)  a company that is \u2014\n(i)  incorporated under the Companies Act (2026 Revision); or\n(ii)  a limited liability company registered under the Limited Liability\nCompanies Act (2025 Revision);\n(b)  a limited liability partnership that is registered in accordance with the\nLimited Liability Partnership Act (2025 Revision); or\n(c)  a company that is incorporated outside of the Islands and registered under\nthe Companies Act (2026 Revision).\n8.\nFailure to satisfy economic substance test\n8.\n(1) If the Authority determines under section 6 that a relevant entity that is required\nto satisfy the economic substance test in relation to a relevant activity has failed\nto satisfy such economic substance test for a financial year, the Authority shall\nissue a notice to the relevant entity notifying the relevant entity of \u2014\n (a) the Authority\u2019s determination that the relevant entity has failed to satisfy\nthe economic substance test in relation to the relevant activity for that\nfinancial year;\n(b) the reasons for the determination;\n(c)\nthe amount of any penalty imposed under subsection (2);\n(d) the date on which the penalty under subsection (2) is due being not less\nthan twenty-eight days after the date of issue of the notice;\n(e)\nthe Authority\u2019s direction as to the action to be taken by the relevant entity\nto satisfy the economic substance test in relation to the relevant activity\nand the date by which such action must be taken; and\n(f)\nthe relevant entity\u2019s right of appeal under section 9.\n(2) The Authority shall impose a penalty of ten thousand dollars on a relevant entity\nthat is required to satisfy the economic substance test in relation to a relevant\nactivity for failing to satisfy such economic substance test.\n(3) If, for the financial year following a financial year in which a notice was issued\nunder subsection (1) (\u201csubsequent financial year\u201d), the Authority determines a\nrelevant entity that is required to satisfy the economic substance test in relation\nto a relevant activity has failed to satisfy the economic substance test in relation\nto such relevant activity, the Authority shall issue a further notice to the relevant\nentity notifying the relevant entity of \u2014\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 8\n\nc\nRevised as at 31st December, 2025\nPage 13\n\n(a)\nthe Authority\u2019s determination that the relevant entity has not satisfied the\neconomic substance test in relation to the relevant activity for the\nsubsequent financial year;\n(b) the reasons for the determination;\n(c)\nthe amount of any penalty imposed on the relevant entity under\nsubsection (4), in addition to the penalty previously imposed under\nsubsection (1);\n(d) the date from which the penalty under subsection (4) is due, being not less\nthan twenty-eight days after the issue of the notice;\n(e)\nthe Authority shall make a report to the Registrar under paragraph (6);\n(f)\nthe Authority\u2019s direction as to the action to be taken by the relevant entity\nto satisfy the economic substance test in relation to the relevant activity\nand the date by which such action must be taken; and\n(g) the relevant entity\u2019s right of appeal under section 9.\n(4) The Authority shall impose a penalty of one hundred thousand dollars on a\nrelevant entity that is required to satisfy the economic substance test in relation\nto a relevant activity for failing to comply with the economic substance test in\nrelation to that relevant activity for a subsequent financial year.\n(5) The Authority shall not impose a penalty under this section after the earlier of\nthe following \u2014\n(a)\none year after becoming aware of the contravention; or\n(b) six years after the contravention occurred.\n(6) Following the issue of a notice under subsection (3), the Authority shall provide\nthe Registrar with a report of the matters referred to in that notice together with\nany additional information (whether or not provided to the Authority under\nsection 7).\n(7) A penalty under this section must be paid before the end of the period of twentyeight days commencing with the date mentioned in subsection (8).\n(8) That date referred to in subsection (7) is the later of \u2014\n(a)\nthe date from which the penalty is due under subsection (1)(d) or (3)(d); or\n(b) if a notice of appeal is given pursuant to section 9, the date on which the\nappeal is finally determined or withdrawn.\n(9) A penalty under this section shall be paid into the general revenue of the Islands\nand may be recovered as a civil debt due to the general revenue of the Islands.\n(10) If the Registrar receives a report under subsection (6), the Registrar shall apply\nto the Grand Court for an order under subsection (11).\n(11) If, on receiving an application under subsection (10), the Grand Court is\nsatisfied that the relevant entity was required to satisfy the economic substance\n\nSection 9\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 14\nRevised as at 31st December, 2025\nc\n\ntest in relation to a relevant activity and failed to satisfy such economic\nsubstance test, the Grand Court may make such order as it sees fit including \u2014\n(a)\nan order requiring the relevant entity to take such action as specified in the\norder, including for the purpose of satisfying such economic substance\ntest; or\n(b) in the case of a relevant entity that is \u2014\n(i)\na company that is registered or incorporated under the Companies\nAct (2026 Revision), an order that it is a defunct company to which\nPart 6 of that Act applies;\n(ii) a limited liability company that is registered under the Limited\nLiability Companies Act (2025 Revision), an order that it is a defunct\ncompany to which section 40 of that Act applies; or\n(iii) a limited liability partnership that is registered under the Limited\nLiability Partnership Act (2025 Revision), an order that the limited\nliability partnership be struck off in accordance with section 31 of\nthat Act as if it is a limited liability partnership that the Registrar has\nreasonable cause to believe is not carrying on business or is not in\noperation.\n9.\nAppeal\n9.\n(1) A relevant entity that has been notified of a determination of a failure to satisfy\nthe economic substance test and has a penalty imposed pursuant to section 8\nmay, within twenty-eight days after the notification, appeal against the\ndetermination and penalty to the Grand Court and such appeal shall act as a stay\non the enforcement of the penalty.\n(2) An appeal under this section may be made on questions of law or fact or both\nand the Grand Court may affirm or reverse the determination and penalty or\nsubstitute its own penalty for that imposed by the Authority.\n(3) A person upon whom a penalty is imposed may appeal against the penalty on\nthe ground that liability to a penalty does not arise.\n10.\nSharing of information\n10. (1) The Authority shall, in accordance with relevant international standards and\nscheduled agreements, provide the information provided to it under this Act in\nrespect of a relevant entity that fails to satisfy the economic substance test in\nrelation to a relevant activity for a financial year to \u2014\n(a)\nthe competent authority in the relevant jurisdiction in which the immediate\nparent, ultimate parent and ultimate beneficial owner of the relevant entity\nresides; and\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 10\n\nc\nRevised as at 31st December, 2025\nPage 15\n\n(b) if the relevant entity is incorporated outside the Islands, the competent\nauthority of the relevant jurisdiction in which the relevant entity is\nincorporated.\n(2) In the case of a relevant entity that is carrying on a high risk intellectual property\nbusiness, the Authority shall, in accordance with relevant international standards\nand scheduled agreements, provide the information provided to it under this Act\nin respect of the relevant entity to \u2014\n(a)\nthe competent authority in the relevant jurisdiction in which the immediate\nparent, ultimate parent and ultimate beneficial owner of the relevant entity\nresides; and\n(b) if the relevant entity is incorporated outside the Islands, the competent\nauthority of the relevant jurisdiction in which the relevant entity is\nincorporated.\n(3)  In the case of an entity that is carrying on a relevant activity and is tax resident\nin a jurisdiction outside of the Islands, the Authority shall, in accordance with\nrelevant international standards and scheduled agreements, provide the\ninformation provided to it under this Act \u2014\n(a)  to the competent authority in the jurisdiction in which that entity is tax\nresident;\n(b)  to the competent authority in the jurisdiction in which the immediate\nparent, ultimate parent and ultimate beneficial owner of the entity resides;\nand\n(c)  if the relevant entity is incorporated outside the Islands, to the competent\nauthority of the relevant jurisdiction in which the entity is incorporated.\n(4)  The Authority may, in accordance with relevant international standards and\nscheduled agreements, provide any information provided to it under this Act as\nappropriate.\n(5)  In this section \u201centity\u201d means \u2014\n(a)  a company that is \u2014\n(i)  incorporated under the Companies Act (2026 Revision); or\n(ii)  a limited liability company registered under the Limited Liability\nCompanies Act (2025 Revision);\n(b)  a limited liability partnership that is registered in accordance with the\nLimited Liability Partnership Act (2025 Revision); or\n(c)  a company that is incorporated outside of the Islands and registered under\nthe Companies Act (2026 Revision).\n\nSection 11\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 16\nRevised as at 31st December, 2025\nc\n\n11.\nConfidentiality\n11. (1) A person who discloses any information \u2014\n(a)\nrelating to the affairs of the Authority;\n(b) relating to the affairs of a relevant entity;\n(c)\nrelating to the affairs of any officer, customer, investor, member, client or\npolicyholder of a relevant entity; or\n(d) shared by or with a competent authority or any communication related\nthereto,\nthat the person has acquired in the course of the person\u2019s duties, or in the\nexercise of the Authority\u2019s functions, under this Act, commits an offence and is\nliable on summary conviction to a fine of ten thousand dollars or to\nimprisonment for one year, or to both, and on conviction on indictment to a fine\nof fifty thousand dollars, or to imprisonment for a term of three years, or to both.\n(2) Subsection (1) shall not apply to a disclosure \u2014\n(a)\nlawfully made in accordance with section 3(1) of the Confidential\nInformation Disclosure Act, 2016 [Law 23 of 2016];\n(b) if the information disclosed is or has been available to the public from any\nother source;\n(c)\nwhere the information disclosed is in a summary or in statistics expressed\nin a manner that does not enable the identity of any relevant entity, or of\nany officer, customer, investor, member, client or policyholder of a\nrelevant entity to which the information relates to be ascertained; or\n(d) by the Authority under this Act.\n12.\nImmunity\n12. Neither the Authority, nor any person designated to act on the Authority\u2019s behalf,\nshall be liable in damages for anything done or omitted in the discharge of their\nfunctions under this Act unless it is shown that the act or omission was in bad faith.\n13.\nMisleading information\n13. (1) A person shall not knowingly or wilfully supply false or misleading information\nto the Authority under this Act.\n (2) A person who contravenes subsection (1) commits an offence and is liable on\nsummary conviction to a fine of ten thousand dollars or to imprisonment for a\nterm of five years, or to both.\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\nSection 14\n\nc\nRevised as at 31st December, 2025\nPage 17\n\n14.\nOffence by officers of a body corporate\n14. (1) Where an offence under this Act that has been committed by a body corporate\nis proved to have been committed with the consent or connivance of, or to be\nattributable to any neglect on the part of any director, manager, secretary or\nother officer of the body corporate, or any person who was purporting to act in\nsuch a capacity, the officer or any person purporting to act in that capacity, as\nwell as the body corporate, commits that offence and is liable to be proceeded\nagainst and punished accordingly.\n(2) Where the affairs of a body corporate are managed by its members,\nsubsection (1) shall apply in relation to defaults of a member in connection with\nthe member\u2019s functions of management as if the member were a director of the\nbody corporate.\n15.\nRegulations\n15. (1) The Cabinet may make regulations \u2014\n(a)\nprescribing anything that may be prescribed under this Act;\n(b) amending the Schedule;\n(c)\nfurther defining the scope of relevant entities that are required to satisfy\nthe economic substance test;\n(d) further defining the scope of relevant activities;\n(f)\nproviding for such matters as may be necessary or convenient for carrying\nout or giving effect to this Act and its administration.\n(2) Regulations made under this Act may \u2014\n(a)\nmake different provisions in relation to different cases or circumstances; or\n(b) contain such transitional, consequential, incidental or supplementary\nprovisions as appear to the Cabinet to be necessary or expedient for the\npurposes of such regulations.\n16.\nSavings, transitional and consequential provisions\n16. (1) Notwithstanding sections 4 and 15, the Cabinet may make regulations to\nprovide for such savings, transitional and consequential provisions to have\neffect in connection with the coming into operation of any provision of this Act\nas are necessary or expedient.\n (2) Regulations made under subsection (1) may be given retrospective operation to\na day not earlier than the day that this Act comes into force.\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nSCHEDULE\n\nc\nRevised as at 31st December, 2025\nPage 19\n\n SCHEDULE\n(section 2(2))\nConstruction of words and expressions\n1.\n(1) In this Act \u2014\n\u201cadequate\u201d shall be construed in accordance with the guidance issued under\nsection 5;\n\u201cappropriate\u201d shall be construed in accordance with the guidance issued under\nsection 5;\n\u201carrangement\u201d includes \u2014\n(a)\na scheme, agreement or understanding, whether or not it is legally\nenforceable; and\n(b) a convention, custom or practice of any kind,\nbut something does not count as an arrangement unless there is at least some\ndegree of stability about it (whether by its nature or terms, the time it has been\nin existence or otherwise);\n\u201cbanking business\u201d has the meaning given to that expression by section 2 of\nthe Banks and Trust Companies Act (2025 Revision);\n\u201ccarrying on business in the Islands\u201d has the same meaning as \u201ccarry on\nbusiness in the Islands\u201d in section 2(2) of the Local Companies (Control) Act\n(2025 Revision) except that references in that definition to \u201ccompany\u201d and\n\u201cexempted company\u201d shall be interpreted to include \u201cpartnership\u201d;\n\u201ccore income generating activities\u201d means activities that are of central\nimportance to a relevant entity in terms of generating relevant income and, must\nbe carried on in the Cayman Islands including \u2014\n(a)\nin relation to banking business \u2014\n(i)\nraising funds, managing risk including credit, currency and\ninterest risk;\n(ii) taking hedging positions;\n(iii) providing loans, credit or other financial services to customers;\n(iv) managing capital and preparing reports or returns, or both, to\ninvestors or the Cayman Islands Monetary Authority, or both;\n(b) in relation to a distribution and service centre business \u2014\n(i)\ntransporting and storing goods, components and materials;\n(ii) managing stocks;\n(iii) taking orders;\n\nSCHEDULE\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 20\nRevised as at 31st December, 2025\nc\n\n(iv) providing consulting or other administrative services;\n(c)\nin relation to financing and leasing business \u2014\n(i)\nnegotiating or agreeing funding terms;\n(ii) identifying and acquiring assets to be leased;\n(iii) setting the terms and duration of financing or leasing;\n(iv) monitoring and revising financing or leasing agreements and\nmanaging risks associated with such financing or leasing agreements;\n(d) in relation to fund management business \u2014\n(i)\ntaking decisions on the holding and selling of investments;\n(ii) calculating risk and reserves;\n(iii) taking decisions on currency or interest fluctuations and hedging\npositions;\n(iv) preparing reports or returns, or both, to investors or the Cayman\nIslands Monetary Authority, or both;\n(e)\nin relation to headquarters business \u2014\n(i)\ntaking relevant management decisions;\n(ii) incurring expenditures on behalf of Group entities;\n(iii) co-ordinating Group activities;\n(f)\nin relation to insurance business \u2014\n(i)\npredicting or calculating risk or oversight of prediction or calculation\nof risk;\n(ii) insuring or re-insuring against risk;\n(iii) preparing reports or returns, or both, to investors or the Cayman\nIslands Monetary Authority, or both;\n(g) in relation to intellectual property business \u2014\n(i)\nwhere the intellectual property asset is a \u2014\n(A) patent or an asset that is similar to a patent, research and\ndevelopment; or\n(B) non-trade intangible (including a trademark), branding,\nmarketing and distribution;\n(ii) in exceptional cases, except if the relevant activity is a high risk\nintellectual property business, other core income generating activities\nrelevant to the business and the intellectual property assets, which\nmay include \u2014\n(A) taking strategic decisions and managing (as well as bearing) the\nprincipal risks related to development and subsequent\nexploitation of the intangible asset generating income;\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nSCHEDULE\n\nc\nRevised as at 31st December, 2025\nPage 21\n\n(B) taking the strategic decisions and managing (as well as bearing)\nthe principal risks relating to acquisition by third parties and\nsubsequent exploitation and protection of the intangible asset;\n(C) carrying on the underlying trading activities through which the\nintangible assets are exploited leading to the generation of\nincome from third parties;\n(h) in relation to shipping business \u2014\n(i)\nmanaging crew (including hiring, paying and overseeing crew\nmembers);\n(ii) overhauling and maintaining ships;\n(iii) overseeing and tracking deliveries;\n(iv) determining what goods to order and when to deliver them,\norganising and overseeing voyages; or\n(i)\nin relation to holding company business, all activities related to that\nbusiness;\n\u201ccompetent authority\u201d means, for each respective jurisdiction, the persons and\nauthorities authorised pursuant to a scheduled agreement;\n\u201cConsolidated Financial Statements\u201d means the financial statements of a\nGroup in which the assets, liabilities, income, expenses and cash flows of the\nultimate parent and the Constituent Entities are presented as those of a single\neconomic entity;\n\u201cConstituent Entity\u201d means \u2014\n(a)\nany separate business unit of a Group that is included in the Consolidated\nFinancial Statements of the Group for financial reporting purposes, or\nwould be so included if equity interests in such business unit of a Group\nwere traded on a public securities exchange;\n(b) any such business unit that is excluded from the Group\u2019s Consolidated\nFinancial Statements solely on size or materiality grounds; and\n(c)\nany permanent establishment of any separate business unit of the Group\nincluded in (a) or (b) provided the business unit prepares a separate\nfinancial statement for such permanent establishment for financial\nreporting, regulatory, tax reporting, or internal management control\npurposes;\n\u201cdistribution and service centre business\u201d means the business of either or both\nof the following \u2014\n(a)\npurchasing from an entity in the same Group \u2014\n(i)\ncomponent parts or materials for goods; or\n(ii) goods ready for sale, and\nreselling such component parts, materials or goods outside the Islands;\n\nSCHEDULE\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 22\nRevised as at 31st December, 2025\nc\n\n(b) providing services to an entity in the same Group in connection with the\nbusiness outside the Islands,\nbut does not include any activity included in any other relevant activity except\nholding company business;\n\u201cdomestic company\u201d means a company that is not part of an MNE Group and\nthat is \u2014\n(a)\nonly carrying on business in the Islands and which complies with\nsection 4(1) of the Local Companies (Control) Act (2025 Revision) or\nsection 3(a) of the Trade and Business Licensing Act (2026 Revision); or\n(b) a company referred to in section 80 of the Companies Act (2026 Revision);\n\u201cfinancing and leasing business\u201d means the business of providing credit\nfacilities for any kind of consideration to another person but does not include\nfinancial leasing of land or an interest in land, banking business, fund\nmanagement business or insurance business;\n\u201cfund management business\u201d means the business of managing securities as set\nout in paragraph 3 of Schedule 2 to the Securities Investment Business Act (2020\nRevision) carried on by a relevant entity licensed or otherwise authorised to\nconduct business under that Act for an investment fund;\n\u201cGroup\u201d means a collection of enterprises related through ownership or control\nsuch that it is either required to prepare Consolidated Financial Statements for\nfinancial reporting purposes under applicable accounting principles or would be\nso required if equity interests in any of the enterprises were traded on a public\nsecurities exchange;\n\u201cheadquarters business\u201d means the business of providing any of the following\nservices to an entity in the same Group \u2014\n(a)\nthe provision of senior management;\n(b) the assumption or control of material risk for activities carried out by any\nof those entities in the same Group; or\n(c)\nthe provision of substantive advice in connection with the assumption or\ncontrol of risk referred to in paragraph (b),\nbut does not include banking business, financing and leasing business, fund\nmanagement business, intellectual property business, holding company business\nor insurance business;\n\u201chigh risk intellectual property business\u201d means an intellectual property\nbusiness carried on by an entity that  \u2014\n(i)\ndid not create the intellectual property in an intellectual property\nasset that it holds for the purposes of its business,\n(ii) acquired the intellectual property asset \u2014\n(A) from an entity in the same Group; or\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nSCHEDULE\n\nc\nRevised as at 31st December, 2025\nPage 23\n\n(B) in consideration for funding research and development by\nanother person situated in a country or territory other than the\nIslands; and\n(iii) licences the intellectual property asset to one or more entities in the\nsame Group or otherwise generates income from the asset in\nconsequence of activities (such as facilitating sale agreements)\nperformed by entities in the same Group;\n\u201cholding company business\u201d means the business of a pure equity holding\ncompany;\n\u201cimmediate parent\u201d, in relation to an entity, means a person that owns directly\ntwenty-five percent or more of the ownership interest or voting rights in the\nentity;\n\u201cinsurance business\u201d has the meaning given to that expression by section 2 of\nthe Insurance Act, 2010 [Law 32 of 2010];\n\u201cintellectual property business\u201d means the business of holding, exploiting or\nreceiving income from intellectual property assets;\n\u201cintellectual property asset\u201d means an intellectual property right including a\ncopyright, design right, patent and trademark;\n\u201cinvestment fund\u201d means an entity whose principal business is the issuing of\ninvestment interests to raise funds or pool investor funds with the aim of\nenabling a holder of such an investment interest to benefit from the profits or\ngains from the entity\u2019s acquisition, holding, management or disposal of\ninvestments and includes any entity through which an investment fund directly\nor indirectly invests or operates (but not an entity that is itself the ultimate\ninvestment held), but does not include a person licenced under the Banks and\nTrust Companies Act (2025 Revision) or the Insurance Act, 2010 [Law 32 of\n2010], or a person registered under the Building Societies Act (2020 Revision)\nor the Friendly Societies Act (1998 Revision);\n\u201cinvestment fund business\u201d means the business of operating as an\ninvestment fund;\n\u201cinvestment interests\u201d means a share, trust unit, partnership interest or other\nright that carries an entitlement to participate in the profits or gains of the entity;\n\u201cjoint arrangement\u201d means an arrangement between the holders of shares or\nrights that they will exercise all or substantially all the rights conferred by their\nrespective shares or rights jointly in a way that is pre-determined by the\narrangement;\n\u201clocal partnership\u201d means a partnership as defined under section 3 of the\nPartnership Act (2025 Revision) that is not part of an MNE Group and \u2014\n(a)  that is only carrying on business in the Islands and is empowered by its\npartnership agreement to carry on business in the Islands; and\n\nSCHEDULE\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 24\nRevised as at 31st December, 2025\nc\n\n(b)  that \u2014\n(i)  is licensed under the Trade and Business Licensing Act (2026\nRevision) and, at the relevant time, is carrying on such business in\naccordance with the terms and conditions imposed in such licence\nand not otherwise;\n(ii)  is operating under a franchise granted by the government; or\n(iii)  complies with section 3(a) of the Trade and Business Licensing Act\n(2026 Revision);\n\u201cMNE Group\u201d means any Group that includes two or more enterprises for\nwhich the tax residence is in different jurisdictions or includes an enterprise that\nis resident for tax purposes in one jurisdiction and is subject to tax with respect\nto the business carried out through a permanent establishment in another\njurisdiction;\n\u201cpleasure yacht\u201d has the meaning given to that expression by section 11(6) of\nthe Merchant Shipping Act, 2024 [Act 1 of 2024];\n\u201cpure equity holding company\u201d means an entity that only holds equity\nparticipations in other entities and only earns dividends and capital gains;\n\u201cRegistrar\u201d\u2014\n(a)\n in relation to a partnership means the Registrar of Limited Partnerships\nunder section 48 of the Partnership Act (2025 Revision);\n(b)  in relation to an exempted limited partnership means the Registrar of\nExempted Limited Partnerships under section 8 of the Exempted Limited\nPartnership Act (2025 Revision); or\n(c)  in relation to a foreign limited partnership registered under section 42 of\nthe Exempted Limited Partnership Act (2025 Revision), means the\nRegistrar of Exempted Limited Partnerships under section 8 of the\nExempted Limited Partnership Act (2025 Revision);\n\u201crelevant activity\u201d means \u2014\n(a) banking business;\n(b) distribution and service centre business;\n(c)\nfinancing and leasing business;\n(d) fund management business;\n(e)\nheadquarters business;\n(f)\nholding company business;\n(g) insurance business;\n(h) intellectual property business; or\n(i)\nshipping business;\nbut does not include investment fund business;\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nSCHEDULE\n\nc\nRevised as at 31st December, 2025\nPage 25\n\n\u201crelevant entity\u201d means \u2014\n(a) a company, other than a domestic company, that is \u2014\n(i)\nincorporated under the Companies Act (2026 Revision); or\n(ii) a limited liability company registered under the Limited Liability\nCompanies Act (2025 Revision);\n(aa)  a partnership as defined under section 3 of the Partnership Act (2025\nRevision), except where the partnership is a local partnership;\n(ab)  an exempted limited partnership as defined under section 2 of the\nExempted Limited Partnership Act (2025 Revision);\n(ac)  a foreign limited partnership registered under section 42 of the Exempted\nLimited Partnership Act (2025 Revision);\n(b) a limited liability partnership that is registered in accordance with the\nLimited Liability Partnership Act (2025 Revision);\n(c)\na company that is incorporated outside of the Islands and registered under\nthe Companies Act (2026 Revision),\nbut does not include \u2014\n(i)\nan investment fund; or\n(ii) an entity that is tax resident outside the Islands;\n\u201crelevant income\u201d, in relation to an entity, means all of that entity\u2019s gross\nincome from its relevant activities and recorded in its books and records under\napplicable accounting standards;\n\u201crelevant jurisdiction\u201d means a country or territory that is a party to a\nscheduled agreement;\n\u201cscheduled agreement\u201d means an agreement that is scheduled to the Tax\nInformation Authority Act (2021 Revision) in accordance with the provisions of\nthat Act;\n\u201cseafarer recruitment and placement service\u201d has the meaning given to that\nexpression by the Maritime Labour Convention, 2006;\n\u201cshipping business\u201d means any of the following activities involving the\noperation of a ship anywhere in the world other than in the territorial waters of\nthe Islands or between the Islands \u2014\n(a)\nthe business of transporting, by sea, passengers or animals, goods or mail\nfor a charge;\n(b) the renting or chartering of ships for the purpose described in\nparagraph (a);\n(c)\nthe sale of travel tickets and ancillary ticket related services connected with\nthe operation of a ship;\n\nSCHEDULE\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 26\nRevised as at 31st December, 2025\nc\n\n(d) the use, maintenance or rental of containers, including trailers and other\nvehicles or equipment for the transport of containers, used for the transport\nof anything by sea; or\n(e)\nthe functioning as a private seafarer recruitment and placement service,\nbut does not include a holding company business or the owning, operating or\nchartering of a pleasure yacht;\n\u201csubsidiary company\u201d means, with respect to another company, a company of\nwhich that other company is the immediate parent;\n\u201cterritorial waters\u201d has the same meaning given to \u201cterritorial sea\u201d in the\nCayman Islands (Territorial Sea) Order 1989 of the United Kingdom [UKSI\n1989 No. 2397];\n\u201cultimate beneficial owner\u201d \u2014\n(a)  in relation to \u2014\n(i)  a company that is incorporated or registered under the Companies\nAct (2026 Revision);\n(ii)  a limited liability company that is registered under the Limited\nLiability Companies Act (2025 Revision);\n(iii)  an exempted limited partnership as defined under section 2 of the\nExempted Limited Partnership Act (2025 Revision);\n(iv)  a limited liability partnership that is registered under the Limited\nLiability Partnership Act (2025 Revision); or\n(v)  a limited partnership registered in accordance with section 47 of the\nPartnership Act (2025 Revision),\n\nhas the same meaning as \u201cbeneficial owner\u201d in section 4 of the Beneficial\nOwnership Transparency Act (2026 Revision); and\n(b)  in relation to \u2014\n(i)  a partnership as defined under section 3 of the Partnership Act (2025\nRevision); or\n(ii)  a foreign limited partnership registered under section 42 of the\nExempted Limited Partnership Act (2025 Revision),\nhas the same meaning as \u201cbeneficial owner\u201d as it relates to exempted\nlimited partnerships, limited liability partnerships and limited partnerships\nin section 4 of the Beneficial Ownership Transparency Act (2026\nRevision).\n\u201cultimate parent\u201d means a Constituent Entity of a Group that meets the\nfollowing criteria \u2014\n(a)\nit owns directly or indirectly a sufficient interest in one or more other\nConstituent Entities of the Group such that it is required to prepare\nConsolidated Financial Statements under accounting principles generally\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nSCHEDULE\n\nc\nRevised as at 31st December, 2025\nPage 27\n\napplied in its jurisdiction of tax residence, or would be so required if its\nequity interests were traded on a public securities exchange in its\njurisdiction of tax residence; and\n(b) there is no other Constituent Entity of the Group that owns directly or\nindirectly an interest described in paragraph (a) in the first mentioned\nConstituent Entity.\n       (2)\nNotwithstanding sections 7(10) and 10(5) of this Act, a partnership under the\nPartnership Act (2025 Revision), an exempted limited partnership under section\n2 of the Exempted Limited Partnership Act (2025 Revision) or a foreign limited\npartnership under section 42 of the Exempted Limited Partnership Act (2025\nRevision) is, from the 20th June, 2021, the commencement of the International\nTax\nCo-operation\n(Economic\nSubstance)\n(Amendment\nof Schedule)\nRegulations, 2021 [SL 48 of 2021], an entity for the purposes of sections 7 and\n10 of this Act.\nPublication in consolidated and revised form authorised by the Cabinet this 28th\nday of January, 2026.\nKim Bullings\n\nClerk of the Cabinet\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nENDNOTES\n\nc\nRevised as at 31st December, 2025\nPage 29\n\nENDNOTES\nTable of Legislation history:\nSL #\nAct\/Law #\nLegislation\nCommencement\nGazette\n79\/2024\n\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) Regulations, 2024\n23-Dec-2024\nLG49\/2024\/s1\n\nInternational Tax Co-operation (Economic Substance)\nAct (2024 Revision)\n8-Feb-2024\nLG7\/2024\/s2\n48\/2021\n\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) Regulations, 2021\n20-Jun-2021\nLG38\/2021\/s1\n\nInternational Tax Co-operation (Economic Substance)\nAct (2021 Revision)\n5-Feb-2021\nLG12\/2021\/s5\n\n56\/2020\nCitation of Acts of Parliament Act, 2020\n3-Dec-2020\nLG89\/2020\/s1\n90\/2020\n\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) Regulations, 2020\n10-Jul-2020\nLG50\/2020\/s2\n\n7\/2020\nInternational Tax Co-operation (Economic Substance)\n(Amendment) Law, 2020\n12-Feb-2020\nLG10\/2020\/s4\n\nInternational Tax Co-operation (Economic Substance)\nLaw (2020 Revision)\n14-Jan-2020\nLG5\/2020\/s3\n33\/2019\n\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) (No.3) Regulations, 2019\n10-Sep-2019\nLG31\/2019\/s1\n20\/2019\n\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) (No.2) Regulations, 2019\n30-Apr-2019\nLG12\/2019\/s1\n10\/2019\nInternational Tax Co-operation (Economic Substance)\n(Amendment of Schedule) Regulations, 2019\n22-Feb-2019\nLG5\/2019\/s1\n\n45\/2018\nInternational Tax Co-operation (Economic Substance)\nLaw, 2018\n1-Jan-2019\nGE98\/2018\/s2\n\nENDNOTES\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 30\nRevised as at 31st December, 2025\nc\n\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nENDNOTES\n\nc\nRevised as at 31st December, 2025\nPage 31\n\nENDNOTES\nInternational Tax Co-operation (Economic Substance) Act (2026\nRevision)\n\nPage 32\nRevised as at 31st December, 2025\nc\n\n(Price: $6.40)","akn_extracted_at":"2026-06-22 15:33:25.314148+00","cms_id":"2018-0045","law_type":"principal","year":"2018","number":"45","title":"International Tax Co-operation (Economic Substance) 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