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Economic Sustance Regulations have been promulgated in nearly all of the recognised "offshore jurisdictions" in a cognisant attempt to primarily prevent tax evasion. All business owners must comply to prevent the imposition of severe penalties and even deregistration of their companies for non-compliance with these regulations. Each jurisdiction have its own particular economic substance rules however they all conform to the following basics: 

Every company in a no or low tax jurisdiction must satisfy the following criteria to meet the "Economic Substance Tests" in relation to any "Relevant Activity" carried on by it.

The three tests are that the company:

• is directed and managed in the relevant jurisdiction in relation to that Relevant Activity;

• conducts/ performs "Core Income-Generating Activity" in the relevant jurisdiction; and

• should employ a sufficient number of qualified full-time employees or incur an adequate level of expenditure on outsourcing to third-party service providers.

To get more information on "Relevant Activities" and "Core Income Generating Activities" come speak to us as we can assist you.