ECONOMIC SUBSTANCE

ECONOMIC SUBSTANCE SERVICE

The International Tax Co-operation (Economic Substance) Act (the “ES Act”) came into force on 1 January 2019. The ES Act requires that all Cayman Islands Fund Management Business (“CIFMB”) satisfy and annual economic substance test (“ES Test”). In order to satisfy the ES Test the CIFMB will need to demonstrate the below activities:

Conduct Cayman Islands core income generating activities (“CIGAs”)

Be directed and managed in an appropriate manner in the Cayman Islands

Have adequate operating expenditure, physical presence and personnel in the Cayman Islands

ECONOMIC SUBSTANCE SERVICE

The International Tax Co-operation (Economic Substance) Act (the “ES Act”) came into force on 1 January 2019. The ES Act requires that all Cayman Islands Fund Management Business (“CIFMB”) satisfy and annual economic substance test (“ES Test”). In order to satisfy the ES Test the CIFMB will need to demonstrate the below activities:

Conduct Cayman Islands core income generating activities (“CIGAs”)

Be directed and managed in an appropriate manner in the Cayman Islands

Have adequate operating expenditure, physical presence and personnel in the Cayman Islands

In order to satisfy the ES Test and the CIFMB will need to demonstrate the below activities:

Taking decisions on the holding and selling of investments

Calculating risk and
reservices

Taking decisions on currency or interest fluctuations and hedging positions

Preparing reports or returns, or both, to investors or the Cayman Islands Monetary Authority

The above criteria are not prescriptive, but rather it will be the responsibility of each entity to determine its own CIGA and to ensure that these activities are performed in the Cayman Islands. There have been no specific recommendations to have a prescribed minimum number of full time employees. Accordingly, compliance with the ES Test will differ as between Relevant Entities depending upon individual business circumstances.

AURUM has qualified individuals to perform Cayman Islands based CIGA activities.

The above criteria are not prescriptive, but rather it will be the responsibility of each entity to determine its own CIGA and to ensure that these activities are performed in the Cayman Islands.

There have been no specific recommendations to have a prescribed minimum number of full time employees. Accordingly, compliance with the ES Test will differ as between Relevant Entities depending upon individual business circumstances.

AURUM has qualified individuals to perform Cayman Islands based CIGA activities.