As global initiatives are pursued to promote best practices, combat tax avoidance, and curb harmful tax competition, intergovernmental groups continue to scrutinize low or zero tax jurisdictions. Recent concerns have led to legislative developments in international financial centers to ensure these standards are met.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Law, 2018 and relevant entities performing relevant activities must meet certain economic substance obligations. Despite recent global restrictions, the Department for International Tax Cooperation has reminded the industry that being directed and managed from the Cayman Islands is only one element of the economic substance (“ES”) test.
Previously compliant cross-border intellectual property and fund management businesses will soon be tested for adequate, local economic substance. We are a full-service financial technology management consulting firm that provides advisory, strategy, risk management, governance, and technological solutions to institutional clients.
We have qualified and suitable professionals readily available to act as an extension to your core team. Our technology outsourcing solutions and asset manager support solutions help you carry out core income generating activity from the Cayman Islands and help you satisfy all three components of your ES test.
1. Conduct core income generating activities in the Cayman Islands
For technology and intellectual property businesses, we have a broad range of applicable experience in technical advisory, software development, network architecture, data management, and technology strategy. We provide customized solutions to our clients and help you develop your intellectual property and contribute to your core income generating activities locally.
For fund management businesses, our team has prior experience managing portfolios between $500 million to $1 billion at hedge funds, private equity firms, and family offices. Our team can provide comprehensive investment portfolio analysis, build complex and dynamic valuation models, and create professional management and investor reports.
2. Directed and managed in an appropriate manner in the Cayman Islands
While the strategic decisions are made by directors and recorded in the minutes, we can provide the appropriate local support to carry out those decisions. Our technology professionals combine senior management experience with strong technical expertise to help you develop sophisticated technology solutions, robust risk management structures, and transparent reporting frameworks. Similarly, our investment professionals create powerful models and dynamic portfolio analysis to drive real-time investment decisions.
3. Have adequate operations, physical presence, and qualified employees in the Cayman Islands
Outsourcing your local presence is one permitted and effective solution to ensure you have an appropriate amount of your business being carried out in the Cayman Islands. Cartan Group holds a full valid local Trade & Business Licence, has commercial office space, and employs full-time experienced financial and technology professionals. We have access to a network of resources of all proficiency levels and we are readily available to scale up or down as your business requires.
Cartan Economic Substance (CES) Report
We understand the onerous responsibility placed on our clients to demonstrate that they have met their local economic substance requirements. As a result, we have created our CES Report and provide it to you on a monthly basis. Our CES Report evidences the specific activity that was carried out by us in the Cayman Islands, states the qualifications and experience of the personnel that performed those activities, and summarizes the strategic decisions that were made from and within the Cayman Islands.
If you would like a sample CES report and to learn more about our economic substance solutions, please reach out to us below.