Friday, November 8, 2019

BVI Issues its Economic Substance Rules - What You Need to Know?

According to Trident Trust Company the BVI’s Economic Substance Rules, which govern the practical application of the Economic Substance (Companies and Limited Partnerships) Act, 2018, have now been finalized.

The Rules were published by the BVI International Tax Authority (ITA) at the beginning of October 2019 and will come into force at the same time as the latest amendments to the BVI's Beneficial Ownership Secure Search System Act, 2017. 

The amendments to the Act were gazetted on 31 October and are expected to take effect soon.
Trident's Latest Briefing Materials

  • The full text of the Rules can be accessed here.  
  • Trident's memo on the Rules summarizes the changes made to them prior to them being finalized.
  • For more comprehensive information on economic substance in the BVI, please read our new Guide to Economic Substance in the BVI, which provides a detailed overview of the jurisdiction's substance rules.
Additional Filing Requirements under the Reporting Regime Entities are now required to provide the following additional information to their Registered Agent (see Section 12.4 of the Rules):
  • Confirmation as to whether a legal entity carries on a relevant activity
  • The residential address of the beneficial owner
  • The total amount of expenditure incurred on the relevant activity
In relation to an entity carrying on intellectual property business that wishes to rebut the presumption that it does not conduct core income generating activity, the following additional information must be provided in accordance with Rule 23:
  • Detailed business plans, which explain the commercial rationale of holding the IP asset in the BVI
  • Concrete evidence that decision-making is taking place within the BVI (e.g., detailed minutes of meetings which have taken place in the BVI)
The third amendment to the BOSS Act makes the following clarifications:
  • It makes it clear that the ITA is the agency with responsibility for economic substance, whereas the Financial Investigation Agency is the competent authority for administering the beneficial ownership regime.
  •  It differentiates between economic substance information (i.e., the information which entities are required to provide under the ESA and which may be disclosed to relevant overseas competent authorities of the entity’s jurisdiction of tax residence as well as the relevant overseas competent authority of each member state in which a beneficial owner or legal owner of the entity resides) and beneficial owner information, which is only disclosed to the United Kingdom Financial Intelligence Units under the 2016 Exchange of Notes.
Need to Structure An Entity or Trust in the BVI?
Contact the Tax Lawyers of
Marini & Associates, P.A. 
For a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid ( 888 882-9243) 


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