Economic Substance Notification User Guide (6/2024)

Summary

This is a DITC user guide explaining how to complete and submit the Annual Economic Substance Notification (ESN) through the CAP online portal. The ESN is a statutory requirement under section 7(1) of the International Tax Co-Operation (Economic Substance) Act, and must be filed by all in-scope entities before they can file their Annual Return with the General Registry. The guide is procedural rather than legal in nature, but it restates several substantive filing obligations and deadlines from the ES Act and Regulations.

• Entities covered: Companies incorporated in the Cayman Islands, limited liability companies, limited liability partnerships, foreign companies registered in the Islands, partnerships, exempted limited partnerships, and foreign limited partnerships.
• Excluded: Trusts are expressly excluded from the ESN requirement.

• Form content: The guide walks through each screen of the ESN form, covering questions on relevant activities and investment fund status.
• Exemptions addressed: Domestic company, local partnership, and tax-resident-outside-the-Islands exemptions.
• Identifiers requested: Provision of CIMA numbers, FI numbers, and IRS GIINs where applicable.

The document also explains post-submission matters: how an ESN can be returned and corrected while still open (until the end of the calendar year following the ESN year), how a Relevant Entity's ES Return or a TRO Form must follow within 12 months of financial year end, and how a Registered Office can update its DITC email address in CAP. It notes that penalties apply to entities that fail to submit a required ESN by the due date.

Key obligations

• All in-scope entities must submit an Annual Economic Substance Notification (ESN) as a prerequisite to filing their Annual Return.
• The ESN must be submitted no later than 31 March each year (the same deadline as the General Registry's Annual Return filing).
• Foreign companies and foreign limited partnerships must submit their ESN before 31 March each year even though they are not required to file an Annual Return.
• Partnerships (general partnerships, limited partnerships, exempted limited partnerships and foreign limited partnerships) must submit ESNs annually, subject to transitional arrangements for those existing prior to 30 June 2021.
• General partnerships must submit their ESNs directly to the DITC rather than through the CAP portal.
• Entities confirmed as a Relevant Entity carrying on a Relevant Activity must file the related ES Return within 12 months of the financial year end.
• Entities relying on the tax-resident-outside-the-Islands exception must file the TRO Form within 12 months of the financial year end.
• Entities/agents must provide CIMA number, FI number and IRS GIIN details where applicable, or confirm none is held, and correct any 'N/A' entries if later followed up on by DITC.
• Entities that fail to submit a required ESN by the due date are subject to penalties.
• Errors identified in a submitted ESN must be corrected by returning and resubmitting the notification while the ESN year remains open in CAP.

Applies to

companies incorporated under the Companies Act, limited liability companies, limited liability partnerships, foreign companies registered under the Companies Act, partnerships under the Partnership Act, exempted limited partnerships, foreign limited partnerships, investment funds, domestic companies, tax resident outside the Islands entities

Deadlines

• 31 March each year: Deadline for submitting the Annual Economic Substance Notification, aligned with the General Registry's Annual Return filing deadline.
• before 31 March (e.g. 2022 ESN due by 31 March 2023): Deadline for foreign companies and foreign limited partnerships to submit their ESN despite not filing an Annual Return.
• within 12 months of the financial year end: Deadline for a confirmed Relevant Entity to submit the ES Return.
• within 12 months of the financial year end: Deadline for an entity relying on the tax-resident-outside-the-Islands exception to submit the TRO Form.
• until the end of the calendar year following the ESN year: Period during which a submitted ESN remains open for amendment/correction.