ITA Audit Against BVI entities is Started

In 2018, the Economic Substance (Companies and Limited Partnerships) Act came into effect. Recently, the deadline for the first filings passed for the BVI International Tax Authority (ITA). ITA has now begun making targeted audit requests to verify the “relevant activities” carried out by BVI entities which have made their mandated economic substance filings.

What is ITA Looking For?

Specifically, the ITA audits are looking for:

Ø Business purpose details

Ø Relevant assets

Ø Nature of their daily business activities

However, they are also interested in details as to what steps the entity took to determine which relevant activities took place during the period of consideration.

BVI entities should therefore (under the provisions of the ES Act) maintain proper documentation concerning any legal advice they might have received in the process of making such decisions. This includes any memos containing director resolutions and relevant advice from BVI legal counsel.

Any organisation that has not already taken these measures should contact their lawyer.

Relevant Activities Must Take Place in the BVI

If you are a BVI entity and you have been determined as executing relevant activities under the 2018 ES Act (passive holding business excluded) – this includes those entities managing investments and those providing multiple interest-bearing loans – you should now be executing such business activity (including decision making) within BVI.

If you have yet to make these arrangements, it’s imperative that you talk to a lawyer to help with your transition and disclose the details to the ITA as required under the law.

The is for general information only. For specific advice about your operational circumstances, you should seek professional counsel.

How can RBCS help?

If you have any queries regarding the economic substance regime, our expert team would be happy to assist. Please click here to contact us.

Report: Seychelles and Anguilla are removed from the bloc's blacklist of tax havens

In early October, European Union finance ministers in Brussels removed the Seychelles from the EU’s tax haven blacklist along with two other states: Dominica and Anguilla. They denied the request from a fourth jurisdiction – Panama.

About the Blacklist

The European Union set up the blacklist in 2017 to combat both tax avoidance and tax evasion. They highlighted a number of jurisdictions for poor transparency. Several states cleaned up their act and subsequently removed while others have been added.

Analysts within the EU recommended the most recent removals as those jurisdictions all agreed to undergo reviews of their respective tax systems.

The organisation responsible for reviews and ongoing monitoring is Global Forum on Transparency and Exchange of Information for Tax Purposes.

Moving to the Grey List

Seychelles, Dominica, and Anguilla are now on the EU’s grey list. This is a list of countries showing genuine commitment to tax transparency reforms. What happens next will depend on the results of each’s country’s respective review.

The European Union announced the changes in late September and met a week later for formal approval. One member state raised concerns about these changes. However, it is not clear which member raised the issue, which of the jurisdictions it concerned, nor the nature of the complaint.

The Seychelles has earnt the status of “tax haven.” But the delisting came after resolution of the major point of concern.

The Situation with Panama

Panama asked for consideration among the latest batch of status changes. But the EU refused, stating that Panama lacked the commitment to abolishing FSIE (Foreign Source Income Exemption). At the time of removal of the three other jurisdictions, Panama had yet to resolve their FSIE issues.

Panama remains on the blacklist and therefore subject to stricter European Union transaction controls.

No New Blacklist Additions

The good news is that no countries currently on the grey list were moved to the blacklist. There were concerns that Turkey would move from the grey list, but this did not happen. The European Union is frustrated with Turkey over its continued refusal to exchange tax information with Cyprus.

Countries that remain on the blacklist are American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.

Click here to EU list of non-cooperative jurisdictions

BVI | Filing Fee Increased for the First Register of Directors

Important Notice Regarding Filing of First Register of Directors of BVI Companies

According to the BVI BUSINESS COMPANIES (AMENDMENT OF SCHEDULE 1) ORDER, 2021, the fee for the filing of the first register of directors will be increased to USD 75. Please note that a filing fee of USD 75 will be added to the incorporation of all BVI companies incorporated on or after 1 Jul 2021. Also, for companies incorporated before 1 Jul 2021, there will be a filing fee of USD 75 if the first register of directors is filed on or after 1 Jul 2021.

A copy of the order can be found at: https://www.bvifsc.vg/sites/default/files/bvi_business_companies_amendment_of_schedule_1_order_2021.pdf