After spending heavily to support their economies during the COVID-19 pandemic, countries in Asia and the Pacific need to look to tax and financial management reforms to mobilize resources for a sustainable, equitable recovery.
“The health crisis offers a unique opportunity for countries to mobilize domestic resources and reshape their tax systems to create more equitable and environmentally sustainable societies for the long term.”
Since early 2020 the COVID-19 pandemic, the worst health crisis in a century, has forced governments in Asia and the Pacific to carry out unprecedented
1 levels of spending to try to preserve services, prop up businesses, and protect jobs as economies slumped and tax revenue plummeted.
News Release | 3 May 2021
MANILA, PHILIPPINES (3 May 2021)
The Asian Development Bank (ADB) today launched an Asia Pacific Tax Hub to create an open and inclusive platform to promote strategic policy dialogue, improve knowledge sharing, and strengthen coordination on tax policy and administration among ADB, its members, and development partners.
The hub will maximize regional and international resources to strengthen domestic resource mobilization (DRM) and international tax cooperation (ITC) in ADB’s developing member countries (DMCs).
“Domestic resource mobilization has emerged as a major strategic priority for our DMCs at this moment. It will be vital in the effort to address debt sustainability and to achieve the Sustainable Development Goals,” ADB President Masatsugu Asakawa said in a seminar at ADB’s 54th Annual Meeting. “The lack of a pan-regional tax community has been a unique and significant shortcoming for Asia and the Pacific. To address thi
Domestic Resource Mobilization and International Tax Cooperation
Effective, timely, and corruption-free delivery of public services can require a steady source of financing for many developing countries in Asia and the Pacific. One of the biggest challenges is how to pool more resources to improve public financial management and enhance government capacity. Countries need to take strong policy and institutional reforms to raise tax yields to meet their Sustainable Development Goals (SDGs). In a globalized world, where cross-border transactions are inevitable, they also need to meet international standards and better cooperate in implementing and enforcing tax rules.
ADB is in a unique position to improve governance at the national and sub-national level, develop capacity and share knowledge at the regional level, and contribute to the global initiatives in collaboration with other international organizations and sub-regional tax associations in the Asia and the Pacific region.
[co-author: Jennifer Marshall]
Relevant entities carrying on all types of relevant activity (except for those carrying on intellectual property business) under the
International Tax Co-operation (Economic Substance) Act (2021 Revision) (“ES Act”) with a financial year end between 31 December 2019 – 30 April 2020, must file an economic substance return (“ES Return”) by the 30 April 2021 deadline set by the Cayman Islands Department for International Tax Cooperation (DITC). There is no ability to extend the date for filing an ES Return beyond the DITC deadline.
Where a relevant entity that is required to satisfy the economic substance test fails to prepare and submit to the DITC the required ES Return within the specified time, the DITC shall by notice in writing impose a penalty of CI$5,000/ US$6,100 and an additional penalty of CI$500/ US$610 for each day during which the failure to comply continues. The penalty must be paid within 30 days, subject to the permitted app
Introduction
Along with its fellow Crown dependencies and overseas territories and other international financial centres, the Cayman Islands now has comprehensive legislation and regulations requiring Cayman-domiciled or registered legal entities which carry on certain activities to have demonstrable substance in the Cayman Islands.
The International Tax Cooperation (Economic Substance) Act reflected the Cayman Islands commitment to its obligations as a member of the Organisation for Economic Cooperation and Development s global Base Erosion and Profit Shifting Inclusive Framework and corresponding EU requirements for no or nominal tax jurisdictions.
This article summarises the key elements of the International Tax Cooperation (Economic Substance) Act, which has been subject to various updates since its introduction, and draws upon guidance issued by the Tax Information Authority (TIA), which has responsibility for the supervision and implementation of the act.