BVI Economic Substance framework now fully operational

The International Tax Authority (the ITA), has informed all Registered Agents (RAs) and legal entities with reporting obligations under the Economic Substance (Companies and Limited Partnerships) Act, 2018 (ES Act) and the Beneficial Ownership Secure Search System Act, 2017 that the Economic Substance Portal as integrated with the Beneficial Ownership Secure Search system (BOSS(ES)s) went live on 12 June 2020.

It is important to note that only RAs have access to the BOSS(ES)s portal and all declarations made on behalf of a legal entity must be done by the RA.

It is important to note that all BVI legal entities were required to have determined their ES classifications before 1 January 2020.  If you have not yet made an ES determination please contact us for help.

We confirm the following updates:

• The reporting portal, BOSS(ES)s, is now operational
• ES classifications and information has now commenced being inputted into BOSS(ES)s by registered agents
• ES data in BOSS(ES)s is now available for review by the ITA

Action required

All BVI legal entities should immediately seek to complete their determination as to their ES classification and report that classification and if necessary other information to their registered agent service provider.

2020 deadlines

Since the BOSS(ES)s is now open we expect the ITA to start reviewing ES information submitted.  We draw your attention to the not insubstantial penalties that are available to ensure enforcement of the provisions of the ES Act and the ES Rules.

• All RAs and legal entities are reminded that the deadline to file declarations is six (6) months after the end of the end of the financial period of the legal entity.
• For legal entities incorporated or formed on or after 1 January 2019, the prescribed financial period will begin on the date of incorporation or formation, and end one (1) year following that date.  Therefore, ES information must be uploaded within 18 months of incorporation or formation – being six (6) months after the end of the relevant entity’s first financial year.
• For legal entities incorporated or formed prior to 1 January 2019, the prescribed financial period is 30 June 2019 to 29 June 2020. Therefore, the deadline for reporting is before 1 January 2021 – being six (6) months after 30 June 2020.

Legal entities that have successfully applied to the ITA to vary their financial year-end for the purposes of the ES Rules may be subject to different deadlines.

What information is required to be submitted to BOSS(ES)s?

All legal entities have reporting obligations.  Legal entities will be required to submit information depending on their ES classification.

In short however, for each legal entity, factors that will affect the ES information supplied include:

• whether a Relevant Activity is carried out
• and where the legal entity is tax resident,

but we should emphasise that all legal entities now have reporting obligations, including legal entities that are not in good standing, or are in the process of solvent or insolvent liquidation.

For further information please see our overview on Economic Substance Requirements in the BVI.

Should you require specific clarification on the ES classification of a legal entity please feel free to contact us and we shall assist where possible.

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