Mutual Legal Assistance (Tax Matters) Act (Revised 2020)

Summary

This is a British Virgin Islands statute (despite covering BVI, not Cayman, law) that provides the legal framework for international tax information exchange. It implements the BVI USA FATCA-style Agreement, the EU Savings Directive regime, the Common Reporting Standard (CRS), and Country-by-Country Reporting (CbCR) under BEPS Action 13, and gives the Financial Secretary (the Authority) powers to compel information and search records to satisfy exchange requests.

• Tax information exchange (Part I): Empowers the Authority to issue notices requiring persons or entities holding information to produce it, to apply for search warrants where notices are not complied with, and to conduct interviews and tax examinations with consent; creates offences for non-compliance.
• Company recordkeeping (section 5A): Requires every company to keep records and underlying documentation (sufficient to explain transactions and determine financial position) at its registered agent's office or another approved location, retained for at least five years, and to notify the registered agent of the physical address of records and of any change of location.
• EU Savings Income (Part II): Sets out rules on identifying and verifying the residence of beneficial owners, withholding tax, exchange of information and confidentiality for savings income paid to EU residents.
• Common Reporting Standard (Part III): Requires Virgin Islands Financial Institutions to establish CRS policies and procedures, register with the Competent Authority, file annual CRS returns in the prescribed form, apply due diligence and reporting rules (including for non-reportable and excluded accounts), and comply with anti-avoidance provisions.
• Country-by-Country Reporting (Part IV): Requires in-scope entities to register and file Country-by-Country reports with the Competent Authority within the time specified for filing, and restricts use and disclosure of CbCR information; a general penalty applies for breaches.

The Act also allows the Minister to make Orders specifying information, manner and deadlines for compliance, and to amend the Schedules (including the USA Agreement text and CRS-related model agreements) by Order. Non-compliance with notices, Orders, or filing obligations under the Act is an offence carrying summary or indictable penalties.

Key obligations

• Companies must keep records and underlying documentation at their registered agent's office (or an approved alternative location) and retain them for at least five years from completion of the relevant transaction or termination of the business relationship.
• Companies must notify their registered agent in writing of the physical address where records are kept, and of any change of location within fourteen days of the change.
• Persons or entities issued a notice under section 5 must provide the specified information within the time, form and verification manner required by the Authority.
• Virgin Islands Financial Institutions must establish and maintain policies and procedures to comply with the Common Reporting Standard.
• Virgin Islands Financial Institutions must register with the Competent Authority as required under the CRS regime.
• Virgin Islands Financial Institutions must file an annual CRS return in the prescribed form with the Competent Authority.
• Entities within scope of Part IV must register and file Country-by-Country reports with the Competent Authority within the time for filing specified under the Act.
• Persons must comply with Orders made by the Minister specifying information, manner and deadlines for provision of information, on pain of criminal penalty for failure to comply.

Applies to

Virgin Islands Financial Institutions, Reporting Financial Institutions, BVI Business Companies (including foreign companies), Entities within scope of Country-by-Country Reporting (multinational enterprise groups), Persons or entities holding relevant tax information

Deadlines

• 14 days of the change of location: A company must provide its registered agent with the new physical address of its records and underlying documentation within fourteen days of any change of location.
• within one month from the date of the warrant: A search warrant issued under section 6 authorises entry and search of premises within one month from the date of the warrant.
• annually: Virgin Islands Financial Institutions must file a CRS return, though the specific annual deadline is set out in provisions/schedules not captured in the extracted excerpt.