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The BVI International Tax Authority (“BVI ITA”) has updated the Rules on Economic Substance (“ES”) in the Virgin Islands under the Economic Substance (Companies and Limited Partnerships) Act, Revised Edition 2020 (as amended), with effect from 24 February 2023. The updates introduce additional reporting requirements that must be submitted as part of each BVI company’s 2023 Annual Economic Substance Reporting.
The new rules are applicable for financial periods commencing on or after 1 January 2022.
Key changes to the ES Rules:
1. Major additional disclosures in the ES reporting
The ES reporting now requires additional disclosures, as follows:
i. For all entities (including reporting as “None”): Tax Payer Identification Number, gross total annual income, business address, Multinational Enterprises Group name and information about parent entities are now required. ii. For entities reporting Holding Business as relevant activity: Gross income and expenditure are now required. iii. For entities reporting relevant activities (excluding Holding Business): Gross income, assets held, and quorum of board meetings and directors are now required. iv. For entities reporting Intellectual Property Business as relevant activity: in addition to the information in (iii) above, details of the relevant tangible and IP asset, decision-making and operations, and business plans are also required.
2. Refined documentary evidence requirement for tax residency outside BVI claim
The ES Rules refine the guidance on claiming tax residence outside the BVI and the acceptable evidence to support the claim. The Rules further detail the restricted jurisdictions in which the entity cannot be regarded as resident for tax purposes, and provide additional requirements for claiming tax residency in Guernsey, Isle of Man or Jersey.
3. Definitions and examples
The ES Rules now provide definitions and examples to help entities better evaluate their ES requirements. The Rules clarify that investment fund business that meets the requirements set in the ES Rules would not be considered as conducting a relevant activity; and also offer explicit guidance for limited partnerships to meet their ES requirements.
You can ask your registered agent to assist your ES filing or send us an email/whatsapp.
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice. |
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