No. 17 of 2015 – Mutual Legal Assistance (Tax Matters) (Amendment) (No. 2) Act, 2015

Summary

This Act amends the Mutual Legal Assistance (Tax Matters) Act, 2003 to implement the Common Reporting Standard (CRS) for automatic exchange of financial account information in the Virgin Islands. It inserts a new Part III into the principal Act, along with new Schedules 4, 5 and 6, establishing the legal framework, competent authority, and detailed reporting and due diligence obligations for Reporting Financial Institutions. It came into force on 1 January 2016.

• Competent Authority: The Financial Secretary is designated as the competent authority for implementing the Common Reporting Standard and may designate another person or authority to perform this role, notified in the Gazette.
• CRS applies from 2016: The Common Reporting Standard applies to automatic exchange of financial account information under relevant agreements from 1 January 2016 and forms part of the laws of the Virgin Islands from that date; the first reporting year is calendar year 2016.
• Due diligence arrangements: Reporting Financial Institutions must establish arrangements to identify Reportable Accounts, apply CRS due diligence procedures, and identify jurisdictions of tax residence of Account Holders and Controlling Persons.
• Notification obligation: A Reporting Financial Institution with reporting obligations must notify the Competent Authority of its name, CRS categorisation, and principal point of contact, and must notify immediately of any change to this information.
• Reporting obligation: Reporting Financial Institutions must file an annual return of information on each Reportable Account, electronically, using the Competent Authority's specified system and validation process.
• Record keeping: Information and records relating to CRS compliance and Reportable Accounts must be kept for six years.
• Excluded accounts: New Schedule 6 defines certain dormant accounts (balance not exceeding US$1,000, with specified periods of inactivity) as Excluded Accounts not subject to CRS reporting.
• Compliance measures: The Competent Authority may require Reporting Financial Institutions to produce information, books, documents or records (including those held outside the Virgin Islands) to verify compliance.
• Anti-avoidance rule: Arrangements entered into with a main purpose of avoiding obligations under the new Part III are to be disregarded for the purposes of the Part.

The amendments also update the principal Act's long title to reflect that it now gives effect to the Common Reporting Standard, and amend section 5 powers of the Authority to request information from persons or entities holding relevant information in an agency or fiduciary capacity.

Key obligations

• Reporting Financial Institutions must establish and maintain arrangements to identify Reportable Accounts, applying CRS due diligence procedures.
• Reporting Financial Institutions must notify the Competent Authority, no later than 30th April in the first calendar year they have reporting obligations, of their name, CRS categorisation and principal point of contact, and must immediately notify any changes to that information.
• Reporting Financial Institutions must file an annual return of Reportable Account information electronically, on or before 31st May of the year following the calendar year to which the return relates.
• Reporting Financial Institutions must treat negative account balances as nil and convert foreign currency thresholds to US dollars using the spot rate on the relevant determination date.
• Reporting Financial Institutions must retain records relating to CRS reporting and due diligence for six years.
• Reporting Financial Institutions must comply with Competent Authority requests to provide or make available for inspection books, documents, records or electronically stored information within a specified time, including bringing information located outside the Virgin Islands into the Virgin Islands if required.
• Where a Reporting Financial Institution appoints an agent to perform its CRS duties, it remains responsible for the agent's compliance and must retain ability to produce relevant records.
• The Competent Authority must publish a list of Participating Jurisdictions in the Gazette at least once each calendar year.

Applies to

Reporting Financial Institutions, banks, trust companies, other financial institutions subject to the Common Reporting Standard

Deadlines

• 1st January, 2016: Commencement of the Act and date from which the Common Reporting Standard applies and forms part of Virgin Islands law.
• Calendar year 2016: First reporting year for purposes of the Common Reporting Standard.
• 30th April in the first calendar year of reporting obligations: Deadline for a Reporting Financial Institution to notify the Competent Authority of its name, CRS categorisation and principal point of contact.
• 31st May of the year following the relevant calendar year: Deadline for a Reporting Financial Institution to make its annual CRS return.
• Six years: Retention period for records and information relating to CRS compliance and Reportable Accounts.
• End of the second calendar year following identification as a Reportable Account: Deadline to use reasonable efforts to obtain missing TINs or dates of birth for Preexisting Accounts under Schedule 4.

Related documents

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