The Crown Dependencies have updated their economic substance guidance notes following further discussions with the Code of Conduct Group (Business Taxation) (“COCG”) regarding the application of elements of the economic substance rules (see attached). A summary of the key changes made in this version (v2.0) of the guidance notes is provided below:
In light of the challenges of agreeing the wording with the various stakeholders engaged in this process, we do not consider that further versions of the guidance notes are likely to be released in the near future and hence entities should progress on the basis that this is the maximum amount of guidance that is going to be released.
KPMG in the Channel Islands is ideally placed to assist entities with the impact of the economic substance rules; from classification of entities through to assistance with preparation of tax returns.
KPMG in the Channel Islands have also developed the KPMG Economic Substance Tool to help entities to understand and manage the challenges posed by the economic substance obligations. The Tool helps entities to identify their rules, assess the likelihood of compliance and collate relevant information in preparation for the submission of subsequent tax returns – housed within an environment that has management review and control processes built into its core.