As previously notified1, new reporting and (in some cases) economic substance requirements for British Virgin Islands 'legal entities' that conduct certain defined 'relevant activities' are now in effect, under the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the "Economic Substance Act").
The International Tax Authority has now issued the final form Rules on Economic Substance, which supplement the Economic Substance Act (together the "Economic Substance regime").
Actions Now Required
Steps must now be taken by all British Virgin Islands companies, and limited partnerships with legal personality, to assess the impact of the new Economic Substance regime, in order to establish:
(a) Where the entity is 'tax resident' for the purposes of the legislation;
(b) Whether the entity is conducting one or more relevant activities (see below);
(c) The level of economic substance requirements that apply to the entity as a result (if any);
(d) How the entity can demonstrate that it is meeting the relevant requirements (where applicable);
(e) What is the entity's financial reporting period for the purposes of the legislation; and
(f) What reporting obligations will apply to the entity, and when.
Your usual Maples Group contact will be able to assist you in making these determinations.
What is a Relevant Activity?
By way of reminder, the Economic Substance regime applies economic substance requirements to the following categories of activity:
· Banking;
· Insurance;
· Shipping;
· Headquarters;
· Distribution and service centres;
· Holding company; and
Please click on any of the relevant activities listed above to view the relevant activity-specific client update.
[1] Please see our previous client update here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.