The Cayman Islands’ economic substance laws (ES Law) were introduced at the end of 2019 in response to the Organisation for Economic Co-operation and Development (OECD)’s Inclusive Framework on Base Erosion and Profit Shifting, and since then law firms and other professional service providers have been assessing what these changes mean and how to be in compliance.
An inevitable result of this global impetus for economic substance in the Cayman Islands has been that businesses have turned to local service providers to deliver turnkey solutions to meet compliance requirements. The focus has been on solutions that allow business to continue to take advantage of the benefits of a Cayman Islands registered company, while fulfilling economic substance requirements in their jurisdiction of choice.
The ES Law in the Cayman Islands requires a “relevant entity” conducting “relevant activity” to prove economic substance in Cayman. The types of businesses that fall under a “relevant activity” include banking business, distribution and service centre business, financing and leasing business, fund management, headquarters or holding company business, insurance business, intellectual property business, and shipping business. A relevant entity that conducts one of these relevant activities has to satisfy the economic substance test in relation to each activity to comply with the law.
If you need assistance in this area, KPMG recently launched the KPMG Economic Substance Tool, a dynamic tool developed to assist with “in dealing with this complicated area of compliance.”
In terms of what is classified as a “relevant entity,” we leave that to the lawyers, but there are Cayman Islands incorporated companies, limited liability companies, limited liability partnerships and registered foreign companies that will fall into this category.
The ‘economic substance test’ determines that a “relevant entity” carrying out “relevant activity” must satisfy the test in order to be compliant with the ES Law. One of those tests relates to the fact that they must have “an adequate physical presence (including maintaining a place of business, or plant, property and equipment) in the Cayman Islands; and has an adequate number of full-time employees or other personnel with appropriate qualifications in the Cayman Islands.”
And this is where Dart Real Estate can help. Dart Real Estate is the largest property developer in the Cayman Islands and manages over 800,000 square feet of Class-A and Class-B office, retail, and commercial space in strategic business locations. These commercial spaces are located in premier locations on Grand Cayman and provide the “place of business” address for companies that must meet the economic substance test.
These new requirements have prompted demand for turnkey, flexible space. In response, Dart Real Estate launched readyspaces. This new concept on Grand Cayman delivers a turnkey option for international businesses to establish a presence, where a fully fitted space eliminates the necessity of setting up a professional environment in Cayman from scratch.
Readyspaces offers commercial office space at Grand Cayman’s Regatta Office Park. It provides a professional working environment for a variety of businesses and individuals on month-to-month terms. Regardless of each venture’s unique nature, readyspaces is equipped with a complete range of business essentials, including high-speed WiFi, a full-time receptionist, access to shared copier and printing facilities, shared kitchens and washrooms, access to high-tech meeting rooms, free and ample parking, a back-up generator, and secure 24/7 access. Premium units have a more open floor plan and space for internal or client meetings are also available.
All readyspaces units are fully furnished, modern and sophisticated. The functional, private units have fast become a vibrant environment with a buzz of business activity, making both independent work and collaboration easier. A convenient online management system makes it simple and straightforward to be a part of this business complex.
Dart Real Estate’s portfolio also includes Grand Cayman’s premium office space at Camana Bay, offering a prestigious business address for both local and international business. Camana Bay also offers a cutting-edge data centre, on-site physical security, environmental controls, and power protection. The Camana Bay Town Centre is one of the most technologically advanced and physically secure of its kind in the Caribbean and with a superior communications infrastructure is particularly well suited to the demands of international banking, financial services, legal, insurance and accounting businesses.
For organisations relocating employees to Grand Cayman to work in these offices, Dart Real Estate can also assist by locating properties for sale via Provenance Properties, the official Christie’s International Real Estate affiliate in the Cayman Islands. This seamless approach to assisting clients seeking a place to live and a place to work makes the process efficient and timely for businesses meeting the economic substance test.
Dart Real Estate has developed more than US$1.5 billion in mixed-use, residential, commercial, recreational, educational, and hospitality throughout the Cayman Islands and has committed to an additional US$1.5 billion investment in the next decade.
To find out more about how we can assist, contact our VP of Real Estate Sales and Marketing, Sue Nickason, on +1.345.325.8341.