The Economic Substance (Companies and Limited Partnerships) Act, 2018 came into force on 1 January 2019 requiring British Virgin Islands companies and limited partnerships that are tax resident and carrying out ‘Relevant Activities’ to demonstrate economic substance. The new legislation, which applies to existing and new BVI entities, was introduced to address the concerns of the EU Code of Conduct Group and the OECD Forum on Harmful Tax Practices regarding economic substance.

This summary replaces our original release of 11 January 2019 and updates from 31 May 2019 and 16 July 2019 (respectively) to provide a consolidated overview of the key aspects of the legislation and guidance.

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BVI ITA issues final Economic Substance Rules – The ITA has now published the final version of the Code which has been renamed Rules (and Explanatory Notes) on Economic Substance (the Rules). The content of the Rules is broadly the same as the draft Code, but it includes a number of amendments following feedback to the BVI Government from industry stakeholders and the EU Code of Conduct Group. The amendments also take into account legislative updates to the Beneficial Ownership Secure Search System Act, 2017 (the BOSS Act) which were made to enable use of the BOSS system to accept the economic substance filings by the registered agents.

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