Mutual Legal Assistance (Tax Matters) (Amendment) Act, 2018 (No. 8 of 2018)

Summary

This Act amends the Mutual Legal Assistance (Tax Matters) Act, 2003 to update the Virgin Islands' Common Reporting Standard (CRS) regime and to insert a new Part IV implementing Country by Country Reporting (CbCR) under BEPS Action 13. It replaces or expands provisions on registration, due diligence policies, return filing, and offences for Virgin Islands Financial Institutions, and creates parallel registration and reporting duties for Constituent Entities of large multinational groups.

• CRS compliance: All Virgin Islands Financial Institutions must apply the Common Reporting Standard, and where the Act is silent the CRS itself governs.
• Policies and procedures: Each Virgin Islands Financial Institution must establish, implement and maintain written policies and procedures covering jurisdiction-of-residence identification, CRS due diligence, and retention of records for at least six years; failure is an offence punishable by a fine up to $100,000.
• Registration: Virgin Islands Financial Institutions must register with the Competent Authority; existing institutions must do so by 30th April 2019, and new institutions by the 30th April following the year they became a Virgin Islands Financial Institution. Failure to register is an offence.
• Annual return filing: Institutions must file a CRS return (or a nil return if no Reportable Account is maintained) for each calendar year, due on or before 31st May of the following calendar year.
• Due diligence flexibility: New section 32A allows institutions to apply certain New Account or High Value Account due diligence procedures to Pre-existing or Lower Value Accounts, exclude small pre-existing entity accounts below $250,000, and use alternative documentary evidence, subject to record-keeping of elected options.
• False information offences: Wilfully or knowingly signing a false self-certification, or providing false or inaccurate information to the Competent Authority, is a criminal offence.
• Country by Country Reporting (Part IV): Constituent Entities of MNE Groups (excluding Excluded MNE Groups with consolidated revenue under 750 million Euro) must register with the Competent Authority no later than the last day of the Reporting Fiscal Year, notify changes immediately, and file the country by country report within twelve months of the last day of the Reporting Fiscal Year, in the OECD standard template format; failure to register is an offence with a fine up to $100,000.
• Confidentiality: The Competent Authority must use the country by country report only for transfer pricing and BEPS risk assessment and international cooperation purposes, and must preserve its confidentiality to at least the standard applicable under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Part IV of the Act is deemed to have come into force on 1st January 2018; the remaining amendments took effect on the Act's commencement following its 4th October 2018 gazettal.

Key obligations

• Virgin Islands Financial Institutions must apply the Common Reporting Standard in accordance with the Act.
• Virgin Islands Financial Institutions must establish, implement and maintain written CRS policies and procedures, including six-year retention of related records.
• Existing Virgin Islands Financial Institutions must register with the Competent Authority by 30th April 2019; new institutions must register by the 30th April following the year they became a Virgin Islands Financial Institution.
• Virgin Islands Financial Institutions must file an annual CRS return (or nil return) on or before 31st May of the calendar year following the year to which it relates.
• Institutions exercising due diligence options under section 32A must keep internal records of the options exercised.
• Constituent Entities of non-excluded MNE Groups must register with the Competent Authority no later than the last day of the Reporting Fiscal Year and notify the Competent Authority immediately of any change to registration information.
• Constituent Entities of non-excluded MNE Groups must file a country by country report, using the OECD standard template, no later than twelve months after the last day of the Reporting Fiscal Year.
• The Competent Authority must preserve the confidentiality of country by country report information to at least the standard applicable under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Applies to

Virgin Islands Financial Institutions, Constituent Entities of MNE Groups

Deadlines

• 30th April, 2019: Deadline for existing Virgin Islands Financial Institutions to register with the Competent Authority.
• 30th April in the first calendar year following becoming a Virgin Islands Financial Institution: Registration deadline for institutions that become Virgin Islands Financial Institutions after the Act's commencement.
• 31st May of each calendar year following the calendar year to which the return relates: Deadline for Virgin Islands Financial Institutions to file their annual CRS return (or nil return).
• no later than the last day of the Reporting Fiscal Year of the MNE Group: Deadline for a Constituent Entity of an MNE Group to register with the Competent Authority under Part IV.
• no later than twelve months after the last day of the Reporting Fiscal Year: Deadline for filing the country by country report.
• 1st January 2018: Date on which Part IV (Country by Country Reporting) is deemed to have come into force.

Related documents

• This document amends Mutual Legal Assistance (Tax Matters) Act, 2003 (No. 18 of 2003)