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The BVI House of Assembly passes two bills related to Financial Services

The BVI House of Assembly passed two “urgent” pieces of legislation related to financial services during their sitting on Thursday.

The first, was an amendment to the Mutual Legal Assistance Tax Matters Act, 2003 (MLA). The second amendment was to the Partnership Act 2006, seeking to re-enforce the responsibility of BVI entities to keep and maintain accounting records readily available upon request. We are advising you of these changes so that you can be prepared and ready.

Below is a brief description of the changes:

Amendment to MLA

The Amendment to the MLA includes two fundamental changes:

(i) to widen the scope of the MLA, and

(ii) to provide clarification for BVI Business Companies on the type of “records and underlying documentation” that are to be maintained.

With regard to the first amendment, this change is needed to extend the scope of the MLA to accommodate other types of information exchange.

This amendment would further allow the jurisdiction to provide automatic and spontaneous information exchange in addition to the exchange of information upon request, which will also facilitate the implementation of the FATCA Agreements with USA and UK.

The second amendment was proposed since The BVI’s Peer Review by the Global Forum recommended that BVI legislation should specify exactly what type of records and underlying documentation are required to be maintained by the BVI BCs.

The wording for the amendment is as follows:

(c) “records and underlying documentation” includes accounts in relation to

(i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;

(ii) all sales and purchases of goods by the company; and

(iii) the assets and liabilities of the company.”.

Amendment to Partnership Act, 2006

A similar amendment was passed for section 81 of the Partnership Act, 2006, as amended in 2012. This amendment is needed now to address an outstanding issue in BVI’s Peer Review Report in relation to bringing clarity to the Limited Partnerships to specify the type of records and underlying documentation that ought to be maintained. Therefore a similar amendment was made in the Partnership Act, 2006 to accommodate this change.

The Convention of Mutual Administrative Assistance in Tax Matters

The Convention on Mutual Administrative Assistance in Tax Matters has been extended to BVI from the United Kingdom as of March 1st, 2014. Since then, the BVI now has more than 60 exchanges of information partners and is able to receive requests for information from any one of them. However, when the BVI jurisdiction opts to automatically exchange information with an individual partner jurisdiction, they must negotiate individual bi-lateral Competent Authority Agreements. There is also a multi-lateral Competent Authority Agreement (CAA) that is being proposed under the Convention, which means if BVI signs on to this multi-lateral CAA, they would be obligated to exchange information on an automatic basis with any jurisdiction that signs on to this multi-lateral CAA. The Government’s preference at this stage is to engage in the bi-lateral CAAs, as this will give BVI the opportunity, to determine who we exchange information with on an automatic basis.

Additional Comments

The BVI government is strengthening the legal basis with regards to the obligation of BVI companies to maintain accounting records, making them readily available on request. Therefore, we invite you to contact us to complete the necessary information.