Mutual Legal Assistance (Tax Matters) (Amendment) Act, 2022

Summary

This Act amends the Virgin Islands' Mutual Legal Assistance (Tax Matters) Act, Revised Edition 2020, transferring key functions from the Financial Secretary to the International Tax Authority (ITA) and substantially rewriting the parts of the principal Act dealing with FATCA (Model 1 IGA), the Common Reporting Standard (CRS), and Country-by-Country (CbC) Reporting under BEPS Action 13.

• Mutual legal assistance mechanics: Replaces the rules on service of notices and documents (section 10) and adds a new section 10A governing service of overseas documents in the Virgin Islands, including use of the Commissioner of Police and affidavits of service.
• FATCA (Part II) overhaul: Repeals and replaces Part II with updated definitions (Active/Passive NFFE, Financial Institution, Specified U.S. Person, etc.) and provisions requiring Reporting Virgin Islands Financial Institutions to establish and maintain compliance arrangements, meet registration requirements, appoint third parties where permitted, apply compliance measures, and report to the Authority, with penalties for avoidance or circumvention.
• CRS (Part III) changes: Confirms the ITA as competent authority for CRS, imposes requirements on Reporting Financial Institutions to establish policies and procedures, sets filing-of-return obligations, and creates an offence and penalty for failure to file a return.
• Country-by-Country Reporting (Part IV): Adds new definitions (including 'Resident for tax purposes in the Virgin Islands', 'Group', 'Ultimate Parent Entity') and requires a Surrogate Parent Entity to file a country-by-country report with the Competent Authority in respect of the Reporting Fiscal Year of an MNE Group.
• Information gathering powers: Empowers the Authority to require, by written notice, any person or entity (including nominees, trustees, agents or fiduciaries) reasonably believed to hold relevant information to provide it, and to conduct interviews or examinations itself rather than only through a Representative.
• Schedules: Repeals Schedules 2 and 3 of the principal Act and renumbers former Schedules 4, 5 and 6 as Schedules 2, 3 and 4.

The amendments are largely structural and definitional, aligning the principal Act's FATCA, CRS and CbC Reporting frameworks with current international standards and consolidating regulatory authority in the ITA rather than the Financial Secretary.

Key obligations

• Reporting Virgin Islands Financial Institutions must establish and maintain arrangements and policies/procedures to comply with FATCA (Part II) reporting obligations.
• Reporting Virgin Islands Financial Institutions must satisfy registration requirements (e.g. obtaining a GIIN) under the revised Part II.
• Reporting Financial Institutions under CRS (Part III) must establish policies and procedures and file returns with the Authority; failure to file a return is an offence subject to penalty.
• A Surrogate Parent Entity of an MNE Group must file a country-by-country report with the Competent Authority (ITA) in respect of the Reporting Fiscal Year, conforming to the requirements of section 39.
• Any person or entity given written notice by the Authority under section 5 (including nominees, trustees, agents or fiduciaries reasonably believed to hold relevant information) must provide the specified information.
• Persons served with mutual legal assistance notices or documents must comply with the prescribed service and proof-of-service procedures under sections 10 and 10A.

Applies to

Reporting Virgin Islands Financial Institutions, Non-Reporting Virgin Islands Financial Institutions, Reporting Financial Institutions (CRS), Non-United States Entities (NFFEs), Multinational Enterprise Groups / Surrogate Parent Entities, Companies, body corporates, associations of persons and limited partnerships subject to mutual legal assistance requests, Individuals subject to information or document service requests

Related documents

• This document amends Mutual Legal Assistance (Tax Matters) Act (Revised 2020)