Mutual Legal Assistance (Tax Matters) (No. 4) Order, 2014

Summary

This Order, made under the Mutual Legal Assistance (Tax Matters) Act, 2003, brings into force Part 1 of that Act in relation to the intergovernmental agreements set out in its Schedule, namely the UK-BVI and US-BVI agreements to improve international tax compliance (the UK and US FATCA-style IGAs). It does not itself create new substantive rules beyond giving legal effect to those agreements and empowering the Financial Secretary (or delegate) as BVI Competent Authority to obtain and exchange the information described in the agreements.

• Scope of agreements: Applies to British Virgin Islands Financial Institutions (custodial institutions, depository institutions, investment entities and specified insurance companies) that are not specifically excluded as Non-Reporting Financial Institutions.
• Core obligation: Reporting BVI Financial Institutions must identify UK Reportable Accounts and US Reportable Accounts using the due diligence procedures in the agreements' annexes, and the BVI must obtain and annually exchange the specified account holder and account information with HMRC (UK) and the IRS (US) on an automatic basis.
• Preexisting accounts: A Preexisting Account is defined as a Financial Account maintained by a Reporting BVI Financial Institution as of 30 June 2014, triggering specific due diligence timelines under the agreements' annexes.
• Exclusions: Certain accounts and entities (e.g. exempt retirement accounts, escrow accounts meeting listed conditions, partner jurisdiction accounts, and defined Non-Reporting Financial Institutions) are excluded from reporting obligations.

The Order was gazetted on 23 October 2014 and made by the Minister for Finance on 30 September 2014. Because much of the substantive detail (due diligence timelines, specific reportable information fields, and exemptions) resides in the Annexes to the agreements reproduced in the Schedule, compliance officers should consult the full agreement text and any related guidance notes for operational detail.

Key obligations

• Reporting British Virgin Islands Financial Institutions must apply the due diligence procedures in the agreements' Annex I to identify UK Reportable Accounts and US Reportable Accounts.
• Reporting British Virgin Islands Financial Institutions must obtain and report to the BVI Competent Authority the account holder and financial account information specified in Article 2 of each agreement.
• The British Virgin Islands (through its Competent Authority) must annually exchange the obtained information with HMRC and the IRS on an automatic basis pursuant to the TIEA and the FATCA agreements.
• Financial Institutions must treat Financial Accounts maintained as of 30 June 2014 as Preexisting Accounts subject to the applicable due diligence timelines in the agreements.

Applies to

Custodial Institutions, Depository Institutions, Investment Entities, Specified Insurance Companies, British Virgin Islands Financial Institutions, Reporting British Virgin Islands Financial Institutions

Deadlines

• 30 June 2014: Cut-off date defining a 'Preexisting Account' as a Financial Account maintained by a Reporting British Virgin Islands Financial Institution on or before this date, triggering applicable due diligence procedures.
• annually: The British Virgin Islands must exchange the specified account information with the UK and US Competent Authorities on an annual, automatic basis.