WEST BAY, GRAND CAYMAN, CAYMAN ISLANDS / ACCESSWIRE / June 1, 2023 / Corporate Services have become increasingly important as companies expand their global footprint and operate across multiple jurisdictions. The Cayman Islands, in particular, is a popular destination for offshore company formation thanks to its neutral fiscal environment and robust legal framework. While this environment can provide numerous benefits, companies that operate in the Cayman Islands must also maintain economic substance in order to comply with international tax regulations. BP Dan Martiuk, a trusted financial advisor, and Board Member for both Star Insurance Company (Cayman), Limited and Western International Trust Company Limited (WITC), reminds companies about the importance of due diligence when operating in the Cayman Islands in five points below.
"Understanding the roles and responsibilities of fiduciaries is not just critical for compliance, but also for setting a business up for success," says BP Dan Martiuk. "Beyond working with qualified and experienced Directors who have a fiduciary duty to act in the best interests of a client and its shareholders, companies also need to think about a host of related corporate services to properly manage company records, registration and reporting, which Western International Trust Company Limited guides for countless clients."
1. Corporate Secretary Services includes the maintenance of corporate records, attending board meetings, drafting and reviewing minutes of meetings.
2. Registered Office Services establish a registered office address, as required by Cayman Islands law.
3. Economic Substance Solutions helps companies maintain compliance with international tax regulations by demonstrating that they have a substantial presence in the jurisdiction where they are incorporated or registered. Companies that conduct certain activities must demonstrate that they have adequate economic substance in the Cayman Islands as economic substance is a critical component of compliance.
4. The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report information about their U.S. account holders to the U.S. Internal Revenue Service (IRS). The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information for tax purposes developed by the OECD. Both FATCA and CRS aim to prevent tax evasion and enhance tax transparency by requiring financial institutions to identify and report on their account holders who are tax residents in other jurisdictions.
"The Cayman Islands is a participating jurisdiction for both FATCA and CRS, which means it has signed agreements with the U.S. and other countries to exchange information under these standards," says BP Dan Martiuk. "WITC provides full FATCA and CRS reporting services to ensure compliance with international obligations."
5. The Cayman Islands Beneficial Ownership Registry (BOR) is a secure and currently non-public centralized platform on which beneficial ownership information of entities must be maintained. A Beneficial Owner of an entity is an individual who holds, directly or indirectly, 25% or more of the issued shares or voting rights in the entity; has the right to appoint or remove a majority of the entity's board of directors or has significant control of the entity. Companies must ensure that the required information on beneficial ownership is accurately maintained and filed on behalf of clients in accordance with Cayman Islands regulations.
BP Dan Martiuk concludes that "Corporate Directors must act with objectivity and impartiality when making decisions on behalf of the company. This means putting the interests of the company and its shareholders ahead of personal or financial interests to support their road to success; objectivity is particularly important in situations where there may be conflicting interests, such as related party transactions."
SOURCE: Cambridge Global
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