The Cayman Islands Tax Information Authority has issued Enforcement Guidelines in relation to CRS and Economic Substance Regulations. Enforcement Guidelines Issued - Common Reporting Standards and Economic Substance The Ministry of Financial Services ...
The Cayman Islands will shortly be passing legislation to require unregulated Cayman Islands entities to maintain books of accounts at their registered office in the Cayman Islands.
Although this legislation is not in force at this time, and is currently undergoing a period of consultation, we recommend all our clients immediately make preparations in order to comply with this anticipated legislation.
The new proposals will require an entity which:
- keeps its books of account outside the Islands; and
- is not subject under any regulatory law to file information regarding its accounts to CIMA semi-annually, at its registered office, information regarding its books of account.
In addition to holding your entity’s books of account at our office, we will be required to file on your behalf, to the Registrar of Companies, annually, a return in the form of a declaration (the precise form of which is yet to be published) stating:
- that the entity maintains proper books of account;
- whether or not the entity is subject to any other regulatory law and so required to file information regarding its accounts to the Cayman Islands Monetary Authority (“CIMA”);
- the physical address of the place at which the books of account are kept (this will be the address of Stuarts Corporate Services Ltd) and, where applicable, confirming that information regarding its books of account has been provided to its registered office semi-annually.
What accounting information is to be provided at the entities’ registered offices?
The precise nature of the information required is yet to be published. As a minimum, we expect it will include, where applicable, material underlying documentation including contracts and invoices with respect to:
- all sums of money received and expended by the entity and the matters in respect of which the receipt and expenditure takes place;
- all sales and purchases of goods by the entity; and
- the assets and liabilities of the entity.
The precise information required will depend on the complexity and the scale of the activity of the entity but will, in any case, need to be sufficient to disclose with reasonable accuracy, the financial position of the entity, which is for the preparation of financial statements for the six-month period.
What are the consequences to an entity for non-compliance?
The Registrar has the power to impose an administrative fine for breaches of these provisions. The fine amount increases for each month it is not paid, to a maximum amount. Where an administrative fine imposed remains unpaid for ninety days after imposition of the fine, the Registrar may strike the entity off the register and the entity shall thereupon be dissolved.
What are the expected deadlines for the provision and filing of the books of account?
The final deadlines for filing have not yet been published. The legislation is at an early stage of development and so the timeline is unclear right now. However, based upon past similar developments in Cayman law, we expect that filings may be required in early 2021.
What should you do now?
If you are not a regulated entity in the Cayman Islands you should prepare your books of account which are sufficient to disclose with reasonable accuracy the financial position of the entity. In due course these should be sent to the registered office at Stuarts Corporate Services Ltd using the following dedicated email address:
Please use the following form of subject line: [company name] [date period of accounts]. For example: ABC Ltd Jan 2019 – Dec 2020