The International Tax Authority of British Virgin Islands has issued the final form Rules on Economic Substance. Actions must be taken by all BVI companies, and limited partnerships with legal personality.

The Economic Substance regime applies to the following categories of activity:

• Banking;
• Insurance;
• Shipping;
• Fund management;
• Financing and leasing;
• Headquarters;
• Distribution and service centres;
• Holding company; and
• Intellectual property.

Actions Required:

Steps must be taken by all BVI companies, and limited partnerships with legal personality:

(a) Where the entity is 'tax resident' for the purposes of the legislation;

(b) Whether the entity is conducting one or more relevant activities;

(c) The level of economic substance requirements that apply to the entity as a result (if any);

(d) How the entity can demonstrate that it is meeting the relevant requirements (where applicable);

(e) What is the entity's financial reporting period for the purposes of the legislation; and

(f) What reporting obligations will apply to the entity, and when.

The date from which an entity is obliged to comply with the economic substance requirements depends upon when the entity was incorporated or formed.

• A company or limited partnership incorporated or formed on or after 1 January 2019 must comply with the new economic substance requirements as from the date of incorporation or formation, because its first financial period will begin on its incorporation or formation;

• A company or limited partnership incorporated or formed before 1 January 2019 is not obliged to comply with the economic substance requirements until 30 June 2019, save where it notifies the International Tax Authority that its financial period for the purposes of Economy Substance Act  will commence on a date earlier than 30 June 2019.

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