Economic Substance - Service Sheet
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© 2019 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved Economic Substance The Economic Substance Rules (ESR) are effective in Guernsey from 1 January 2019. All Guernsey tax resident companies must determine if they are undertaking a relevant activity and, if so, the directors must assess whether or not their current practices and organisation comply with the new substance requirements. Have you dotted the i’s and crossed the t’s…? Compliance with the new regime will be monitored through an enhanced tax return. In addition to confirming the company’s activities, the directors need to provide detailed financial and other information to demonstrate the company’s substance in Guernsey. Should a company be found to be lacking in substance then the implications are substantial fines followed, ultimately, by the possibility of striking off. There is no statutory transitional period so it is imperative that directors take action in 2019 to assess compliance with the ESR. Rules to similar effect have been introduced in Jersey, Isle of Man, Bermuda, The Bahamas, Cayman Islands, Anguilla and BVI. Proposition KPMG in the Channel Islands is able to support businesses in managing the impact of ESR on their company or on companies they administer in a number of different ways. These include: 1. Assess which companies are in scope of the ESR either through undertaking assessment or by providing training and checklists to allow staff to assess which companies are impacted by ESR. 2. Perform GAP analyses to benchmark current practices against the new requirements in respect of management and direction, the undertaking of core income generating activities, and the adequacy of personnel, expenditure and premises in accordance with the ESR. 3. Ongoing support from your local KPMG team. 4. Annual reviews and assistance with the new corporate tax returns as appropriate. Rather than a static, one size fits all offering, our services are flexible and we want to help your business in a way that reflects your needs and can tailor what we do to suit different organisational structures or business structures. Bronze package Training on the rules and provision of checklists which can be modified to business needs to allow staff to determine which entities are impacted and which require additional support. This will include KPMG support throughout the assessment process via your local team. Silver package Provision of the appropriate training and checklists as well as performing GAP analysis for all impacted entities. Gold package Package 1 + 2 as well as assistance with corporate income tax returns including an annual review of each company’s continued compliance with ESR.
Transcript of Economic Substance - Service Sheet
© 2019 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved
Economic Substance
The Economic Substance Rules (ESR) are effective in Guernsey from 1 January 2019. AllGuernsey tax resident companies must determine if they are undertaking a relevantactivity and, if so, the directors must assess whether or not their current practices andorganisation comply with the new substance requirements.
Have you dotted the i’s and crossed the t’s…?
Compliance with the new regime will be monitored through an enhanced tax return. In addition to confirmingthe company’s activities, the directors need to provide detailed financial and other information to demonstratethe company’s substance in Guernsey. Should a company be found to be lacking in substance then theimplications are substantial fines followed, ultimately, by the possibility of striking off. There is no statutorytransitional period so it is imperative that directors take action in 2019 to assess compliance with the ESR.
Rules to similar effect have been introduced in Jersey, Isle of Man, Bermuda, The Bahamas, Cayman Islands,Anguilla and BVI.
Proposition
KPMG in the Channel Islands is able to support businesses in managing the impact of ESR on their company or on companies they administer in a number of different ways.
These include:
1. Assess which companies are in scope of the ESR either through undertaking assessment or by providing training and checklists to allow staff to assess which companies are impacted by ESR.
2. Perform GAP analyses to benchmark current practices against the new requirements in respect of management and direction, the undertaking of core income generating activities, and the adequacy of personnel, expenditure and premises in accordance with the ESR.
3. Ongoing support from your local KPMG team.
4. Annual reviews and assistance with the new corporate tax returns as appropriate.
Rather than a static, one size fits all offering, our services are flexible and we want to help your business in a way that reflects your needs and can tailor what we do to suit different organisational structures or business structures.
Bronze package
Training on the rules and provision of checklists which can be modified to business needs to allow staff to determine which entities are impacted and which require additional support. This will include KPMG support throughout the assessment process via your local team.
Silver package
Provision of the appropriate training and checklists as well as performing GAP analysis for all impacted entities.
Gold package
Package 1 + 2 as well as assistance with corporate income tax returns including an annual review of each company’s continued compliance with ESR.
Experts with deep knowledge
Jurisdictional coverage
Dedicated subject matter expert pool
We have first hand experience having already worked with a range of firms across numerous sectors
Fund Management Group
Worked with a multinational funds group in assessing the impact of ESR:
— Analysed all entities to identify those in scope of the new ESR
— Provided a GAP analysis for the impacted entities
— Provided recommendations on adjusting the business activities to meet the ESR
Currently providing tax compliance services to this group of companies
Trust Company
Assisted a local trust company to assess the impact on its client structures. Work included training of staff, providing automated checklists and technical assistance on more complicated cases.
Your contacts at KPMG in the Channel Islands
© 2019 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Tony ManciniTax Partner+44 (0)1481 [email protected]
Paul BealeSenior Manager, Tax+44 (0)1481 [email protected]
Nana AboagyeAssociate Manager, Tax+44 (0)1481 [email protected]
Why KPMG?The only Big 4 firm to have partners on government working parties in every impacted jurisdiction
KPMG has long-established and experienced teams in each jurisdiction
We have a large team of experienced tax professionals who have been working with our clients on their substance review
Our credentials
Scalable services Meeting evolving needs Multi-jurisdictional
In addition to the above, we have assisted a number of local administrators and businesses in assessing the impact of these rules on their clients or own structures.
