The OECD and the EU have been working with various low/zero tax jurisdictions to introduce Economic Substance Requirements ("ESR") in their domestic legislation. In response, BVI, Cayman, The Bahamas, Barbados, the Channel Islands, Mauritius, United Arab Emirates, Bermuda, and other low/zero tax jurisdictions have introduced economic substance legislation.
Economic substance legislation intends to combat tax avoidance by multinationals and business entities shifting profits from high-tax jurisdictions to entities in low/zero-tax jurisdictions without adequate economic substance.
Entities incorporated in these ESR jurisdictions must file an annual notification declaring whether or not an entity carries out any of the relevant activities as specified under the respective ESR regulations. Entities that carry out any relevant activity must meet economic substance requirements in the jurisdiction and submit additional details of its activities and turnover, employees, office, expenditures, etc., to demonstrate that ESR is adequately met.
Amicorp has an in-depth knowledge of the ESR legislation and can assist with the substance requirements in various jurisdictions.
Our ESR services include:
Initial Assessment & Classification
- Assessment of ESR applicability - whether an entity is in-scope of ESR or not
- ESR Classification under one or more of the relevant activities
- Impact of the ESR requirements per classification
Substance Services & Solutions
- Securing local substance through facilitating and documenting board meetings, access to office space, administration services, employee management
- Preferential alternative structuring and implementation thereof
ESR Annual Reporting
Where Amicorp acts as a registered agent, it will provide:
- Annual notification if the entity is in the scope of ESR or not
- Annual reporting of activities and turnover, employees, office, expenditures, etc., to demonstrate that ESR is adequately met
Documentation
- Filing of annual declaration/notification declaring whether or not the entity is in the scope of ESR
- For entities with relevant activities: Filing of annual reporting of activities and turnover, employees, office, expenditures, etc., to demonstrate that ESR is adequately met
- Deadlines for ESR Annual Filings
Effective dates and deadlines
The ESR legislation has been in effect for most jurisdictions since January 1, 2019. (For the UAE, it was April 1, 2019). The entities are required to file the annual notification to the tax authorities declaring whether or not the entity is in scope for the ESR Legislation and its ESR Classification within the following deadlines:
| Jurisdiction | ESR Annual Filings due date |
|---|---|
| BVI | Within six months from the end of the relevant financial period |
| Cayman Islands | Before Annual return (For entities with relevant activities, additional substance reporting is to be filed by December 31 of the following year) |
| The Bahamas | Within 9 months from the end of the relevant financial year |
| Barbados | Within 12 months from the end of the relevant financial year |
| UAE | Within six months from the end of the relevant financial year (For entities with relevant activities, additional substance reporting is to be filed within 12 months from the end of the relevant financial year) |
Our broad service offerings can enhance the governance in these jurisdictions and help you to stay compliant with Economic Substance Requirements.
For more detailed information about our services, for inquiries or proposal requests, please contact a local office in the applicable jurisdictions, your local Amicorp Account Manager, or our dedicated team of ESR experts at esr@amicorp.com
Our professionals
CAYMAN ISLANDS - Kimbert Solomon
THE BAHAMAS - Marvin Taylor
BVI - Pedro Garcia
UAE - Omid Arshan
BARBADOS – Careen A. Byfield Leyshon
