By way of background, a first draft Economic Substance Code was published by the BVI International Tax Authority (“ITA”) in April 2019. It is anticipated that the final code, now referred to as Rules (and Explanatory Notes), will be published on 30 September 2019 (the “Rules”). A further update will be circulated once the final Rules are available.
The Rules will provide important guidance on how the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “Act”) is interpreted by the ITA.
It is important to note that:
· The BVI authorities have expressed their view that all BVI entities in-scope of the Act should be able to demonstrate their basis for classification under the Act, as well as to keep any relevant documentation in the event that authorities request such information in the future.
· The first “compliance period” has commenced already for all BVI companies and limited partnerships with legal personality as set out in the Act.
· Any company and/or individual failing to classify may be subject to significant fines and other penalties, such as the possibility of being struck off, or in extreme cases, the imprisonment of non-compliant individuals.
· In order to avoid fines and other penalties, you should classify your BVI entity under the Act as soon as possible.
We would be happy to assist you with a review of your BVI entity for the purposes of the required classification. Upon review, Hatstone will issue you with advice which can form part of the records of the BVI entity.
HATSTONE SUBSTANCE SERVICES
Hatstone can assist you with the establishment of economic substance in the event that the assessment of your BVI entity triggers the need to create economic substance in the BVI.
Hatstone substance services include:
· Individual directorships provided by experienced BVI resident professionals.
· Outsourcing services to assist with core income-generating activities that are being conducted in the BVI, including assistance on human resources, recruiting and seconding staff.
· Accounting, payroll, record keeping and mail correspondence services.
· Provision of office space, board rooms and office infrastructure.
· Assistance with obtaining local licences and permits.