The Cayman Islands Tax Information Authority (TIA) issued two sets of guidelines, namely:
- Enforcement Guidelines: Common Reporting Standard
- Enforcement Guidelines: Economic Substance
The documents set the procedures for enforcement of previously adopted CRS and ES regulations.
In particular, the CRS guidelines sets the penalty for the offences committed by the body corporate or individual on the level of up to US$ 60,975.
Below are the factors which TIA should examine when consider whether the penalty shall be imposed and in what size:
- the need to ensure strict compliance with, and to penalise and deter contravention of, the CRS Regulations;
- the nature, seriousness and consequences of the breach;
- the apparent degree of the party’s inadvertence, intent or negligence in committing the breach;
- the party’s conduct after becoming aware of the contravention, including transparency with the TIA and efforts taken to remedy the breach and prevent recurrence; and
- the party’s history of compliance with the CRS.
The ES enforcement guidelines is imposing the administrative penalties in case of offences committed by the company and its directors in the following cases:
- Missed reporting: Where a relevant entity has failed to prepare and submit an ES return by the relevant deadline, the TIA may by writing impose a penalty of approximately US$6,098, plus a daily default fine of US$610 for so long as the failure to comply continues.
- Failure of ES test – Year 1: The TIA is required to impose a fine of up to approximately US$12,195 on a relevant entity which has failed to meet the ES test applicable to the relevant activity in the first year of assessment.
- Failure of ES test – Subsequent year: The TIA is required to impose a fine of up to approximately US$121,951 on a relevant entity which has failed to meet the ES test applicable to the relevant activity in a subsequent year of assessment.
For more information regarding Cayman Islands CRS and Economic substance feel free to contact the team of Astra Trust.
