British Virgin Islands updates tax transparency rules

The BVI Mutual Legal Assistance (Tax Matters) (Amendment) Act 2018 has introduced a number of changes to tax reporting obligations in the BVI, both in relation to CRS and CbCR. The changes bring the BVI into line with similar jurisdictions, such as the Cayman Islands.

CRS changes

With effect from 18 September 2018, the revised CRS implementation provisions will require all BVI financial institutions (FIs) to establish, implement and maintain written policies and procedures for the purposes of complying with their CRS obligations. These policies must set out how the FI intends to identify the jurisdictions in which account holders are resident, apply due diligence procedures and maintain records.

In addition, all FIs (not only reporting FIs) are now required to register with the BVI tax authorities by 30 April 2019 (or, in future, by 30 April of the year following becoming an FI). All FIs must also now report to the BVI tax authorities, filing a nil return if they have no reportable accounts in the relevant period. The annual reporting deadline is 31 May of the year following the year to which the report relates.

Failure to comply with any of these CRS requirements may result in the imposition of a fine of up to $100,000.

CbCR

The Amendment Act also introduces CbCR requirements in BVI with effect from 01 January 2018. Pursuant to these rules, which implement the OECD BEPS Action 13 report, qualifying multinational enterprises (MNEs) are required to report annually certain financial information in each jurisdiction in which the MNE operates. The BVI tax authorities will automatically exchange reports with other participating jurisdictions.

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