Purpose and scope

The purpose of the Amendment of ES Schedule Regulations is to amend the schedule to Cayman’s principal economic substance legislation, namely the International Tax Co-operation (Economic Substance) Act (as revised, ES Act) in order to bring within scope of the existing economic substance regime general and limited partnerships (other than local partnerships*) subject to the Partnership Act (as revised), and exempted limited partnerships and foreign limited partnerships registered under the Exempted Limited Partnership Act (as revised) (all such partnerships other than local partnerships, collectively, Partnerships).  This expansion of the regime’s scope necessitated amendments to certain key terms in the Schedule to the ES Act (e.g. broadening of the definitions of “entity” and “relevant entity”) and the addition of new terms.

The purpose of the Amendment of ES Dates Regulations is to amend the principal regulations, namely the International Tax Co-operation (Economic Substance) (Prescribed Dates) Regulations, 2018, in respect of a relevant entity that is a Partnership carrying on a relevant activity and that is required to satisfy the economic substance test:

  • to add the dates by which the Partnership must satisfy the economic substance test; and
  • to prescribe a date (namely 1 July 2021) for the purpose of determining the commencement of the earliest possible financial year of the Partnership to be covered by its report to the Tax Information Authority (TIA) under section 7(3) of the ES Act.

Date from which a Partnership must comply with the ES Act

Pursuant to the Amendment of ES Dates Regulations, a Partnership that is a relevant entity subject to the ES Act and carrying on a relevant activity must, if it was –

  • in existence prior to 30 June 2021, satisfy the economic substance test from 1 January 2022; or
  • not in existence prior to 30 June 2021, satisfy the economic substance test from the date on which that Partnership commences carrying on a relevant activity.

Under the ES Act, as amended by the above regulations:

  • a Partnership (including local partnerships) must file annually with the TIA a notification form to indicate, among other things, whether or not it is carrying on a relevant activity and, if so, whether or not it is a relevant entity; and
  • a Partnership 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 that Partnership commencing on or after 1 July 2021, prepare and submit to the TIA a report for the purpose of the TIA’s determination of whether the economic substance test is satisfied.

Related updates

On 30 June 2021, the Department of International Tax Co-operation (DITC) published on its website with immediate effect the TIA’s Economic Substance Guidance for Geographically Mobile Activities – version 3.1 (Revised Guidance) (available here).  The Revised Guidance replaces guidance version 3.0, issued on 13 July 2020.  The principal change reflected in the Revised Guidance is the insertion of a new appendix specifically dealing with Partnerships.

The DITC has announced that it will be publishing an updated DITC Portal User Guide to assist compliance with filing obligations for Partnerships.


*For the purposes of the ES Act, a local partnership is not a “relevant entity” and will not be required to submit an economic substance return or tax resident outside the Islands return.  However, a local partnership will nonetheless be required to submit an economic substance notification form.


The content of this article is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be sought in respect of your specific circumstances.

Key Contacts

Peter Colegate

Partner, Global Head of Technology & Innovation : Cayman Islands

T +1 345 814 2745
E Email Peter

Miriam Smyth

Senior Associate: Cayman Islands

T +1 345 814 2975
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Marc Parrott

Partner: Hong Kong, Shanghai

T +852 2905 5710
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