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

Summary

This Act amends the British Virgin Islands' Mutual Legal Assistance (Tax Matters) Act, 2003 to implement the OECD Common Reporting Standard (CRS) for automatic exchange of financial account information. It inserts a new Part III into the principal Act setting out the CRS framework, designates the Financial Secretary as Competent Authority, and adds new Schedules containing the CRS reporting and due diligence rules, a model competent authority agreement, and a list of excluded accounts.

• Scope: Applies to Reporting Financial Institutions in the Virgin Islands (banks, trust companies, investment entities, insurers and similar institutions caught by the CRS definitions).
• Effective date: The Act commenced on 1 January 2016, and the Common Reporting Standard applies to automatic exchange under relevant agreements from that date, becoming part of BVI law.
• Due diligence and identification: Reporting Financial Institutions must establish arrangements to identify Reportable Accounts, determine each Account Holder's or Controlling Person's tax residence, and apply the CRS due diligence procedures.
• Registration/notification: Institutions with reporting obligations must notify the Competent Authority electronically of their name, CRS categorisation and principal point of contact, and must notify any changes immediately.
• Annual reporting: Institutions must file an electronic annual return of Reportable Account information for each Reportable Account, starting with the 2016 calendar year as the first reporting year.
• Record keeping: Records used to identify and report on accounts, or evidencing compliance steps, must be kept for six years.
• Compliance and enforcement: The Competent Authority may require production or inspection of records, may treat non-compliant returns as not made, and institutions using third-party agents remain responsible for the agent's compliance.
• Excluded accounts and anti-avoidance: Schedule 6 defines certain dormant accounts as Excluded Accounts (not Reportable), and a general anti-avoidance rule disregards arrangements entered into mainly to avoid Part III obligations.

The new Schedules 4 and 5 respectively set out the detailed CRS reporting and due diligence standard and a model form of competent authority agreement for implementing CRS exchanges, both of which form part of the amended principal Act.

Key obligations

• Reporting Financial Institutions must establish and maintain arrangements to identify Reportable Accounts and apply CRS due diligence procedures.
• Reporting Financial Institutions must notify the Competent Authority electronically, no later than 30 April in the first calendar year they have reporting obligations, providing their name, CRS categorisation and principal point of contact details.
• Reporting Financial Institutions must immediately notify the Competent Authority of any change to the information provided in their notification.
• Reporting Financial Institutions must file an annual electronic return of information on each Reportable Account, on or before 31 May of the year following the calendar year to which the return relates, starting with 2016 as the first reporting year.
• Reporting Financial Institutions must retain records and documentary evidence relating to CRS compliance and reported information for six years.
• Reporting Financial Institutions must treat negative account balances as nil and convert non-USD balances to USD using the spot rate for threshold determination purposes.
• A Reporting Financial Institution that appoints an agent to carry out its CRS duties remains responsible for the agent's compliance and must retain access to relevant records.
• Reporting Financial Institutions must provide information or make records available for inspection within the time specified by the Competent Authority when required for compliance verification, including bringing records located outside the Virgin Islands back within a specified time.

Applies to

Reporting Financial Institutions

Deadlines

• 1st January, 2016: Commencement of the Act and date from which the Common Reporting Standard applies and forms part of Virgin Islands law.
• 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 file its annual CRS return.
• Calendar year 2016: First reporting year for CRS purposes.
• Six years: Minimum retention period for records and documentary evidence relating to CRS compliance.
• By the end of the second calendar year following identification as a Reportable Account: Deadline to use reasonable efforts to obtain missing TIN(s) or date of birth for preexisting Reportable Accounts.

Related documents

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