ITA Audit for the British Virgin Islands

In 2018, the Economic Substance (Companies and Limited Partnerships) Act came into effect. Recently, the deadline for the first filings passed for the BVI Tax Authority. They are now expected to commence targeted requests for audits to entities requesting verification of relevant activities.

What is ITA Looking For?

Specifically, the ITA audits are looking for:

• Business purpose details
• Relevant assets
• Nature of their daily business activities

However, they are also interested in details of the steps the relevant 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.