The Government of the Virgin Islands has implemented Base Erosion and Profit Shifting (BEPS) Action 13, Country by Country Reporting by way of amendment to the Mutual Legal Assistance (Tax Matters) Act, 2003 (MLA) in section 14 of Act No. 8 of 2018 where a new Part IV has been inserted in the MLA.
Country by Country reporting is one of the four minimum standards under the OECD BEPS measures that aim to improve transparency between multi-national entities and tax authorities.
It applies to Multi-National Entities with annual consolidated group revenue equal to or exceeding $750 million EUROS in the reporting fiscal year of the Group. The reporting fiscal year is the fiscal year, commencing on or after 1st January, 2018.
The Competent Authority in the British Virgin Islands for Country by Country Reporting is the International Tax Authority.
The new Part IV section 38 (1) of the MLA provides for any Constituent Entity of an MNE Group that is resident for tax purposes in the British Virgin Islands to register with the Competent Authority whether it is the Ultimate Parent Entity or the Surrogate Parent Entity, no later than the last day of the Reporting Fiscal Year of such MNE Group.
Section 38 (2) provides that where a Constituent Entity of an MNE Group that is resident for tax purposes in the British Virgin Islands is not the Ultimate Parent Entity nor the Surrogate Parent Entity, it shall register with the Competent Authority, the identity and the tax residence of the Reporting Entity, no later than the last day of the Reporting Fiscal Year of such MNE Group.
Therefore, where a BVI entity is part of an MNE Group and it is not the reporting entity, that BVI entity still have an obligation to register with the International Tax Authority and identify the name of the Reporting Entity and the tax residence of the reporting entity for the MNE Group that it is a part of.
As such, the International Tax Authority wishes to inform Constituent Entities of MNE Groups, resident for tax purposes in the British Virgin Islands, that the means of reporting for Country by Country will be via its electronic portal, the BVI Financial Account Reporting System, (BVIFARS) the same system that is used for US Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) Reporting.
The International Tax Authority is in the process of updating BVIFARS to accommodate the requirements of Country by Country reporting. Therefore the International Tax Authority wishes to inform those Entities that have an obligation to register with the International Tax Authority for Country by Country Reporting, that as our system is not ready, an extension is hereby granted for registration and a further Press Release will be issued in the new year to inform entities of how they will be required to register with the International Tax Authority and at that time, you will be advised of the extended deadline by which your registration applications shall be submitted.
Further, guidance as it relates to the amendments to the MLA will also be made available in the New Year,