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

Summary

This Act amends the Mutual Legal Assistance (Tax Matters) Act, 2003 to strengthen Common Reporting Standard (CRS) compliance obligations for Virgin Islands Financial Institutions and to insert a new Part IV implementing Country-by-Country (CbC) reporting under BEPS Action 13. It introduces new definitions, registration and filing deadlines, due diligence rules, and offence provisions with fines.

• CRS policies and procedures: Every Virgin Islands Financial Institution must establish, implement and maintain written policies and procedures to identify reportable jurisdictions, apply CRS due diligence, and retain records for at least six years.
• Registration: Virgin Islands Financial Institutions must register (previously 'notify') with the Competent Authority; existing institutions by 30 April 2019, new ones by 30 April of the first calendar year after becoming a Virgin Islands Financial Institution.
• Annual filing: Institutions must file an annual return (or a nil return if no reportable accounts) by 31 May of each year following the calendar year to which the return relates.
• Due diligence flexibility: New optional due diligence rules (section 32A) allow applying new-account procedures to pre-existing accounts, using residence address or electronic record searches, excluding small entity accounts below USD 250,000, and special treatment of group insurance/annuity contracts and trust beneficiaries.
• Country-by-Country reporting (Part IV): Constituent Entities of MNE Groups (excluding those below the EUR 750 million revenue threshold) must register with the Competent Authority and, where applicable, file a CbC report no later than 12 months after the last day of the Reporting Fiscal Year.
• Offences and penalties: Failure to register, maintain policies and procedures, or file returns, and willful provision of false information or false self-certifications, are offences punishable by a fine of up to USD 100,000.

Part IV (Country-by-Country Reporting) is deemed to have come into force on 1 January 2018, while the remainder of the amendments take effect on the Act's commencement. The Competent Authority is required to use CbC reports for transfer pricing risk assessment (not for direct adjustments) and to keep such information confidential to at least the standard required under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Key obligations

• Virgin Islands Financial Institutions must establish, implement and maintain written CRS policies and procedures, including identifying tax residence jurisdictions and applying CRS due diligence.
• Virgin Islands Financial Institutions must keep CRS-related records for at least six years from the end of the relevant year.
• Existing Virgin Islands Financial Institutions must register with the Competent Authority by 30 April 2019; new ones by 30 April of the first calendar year after becoming a Virgin Islands Financial Institution.
• Virgin Islands Financial Institutions must file an annual CRS return (or nil return) on or before 31 May of the calendar year following the reporting year.
• A Virgin Islands Financial Institution exercising options under section 32A must keep an internal record of the option exercised as part of its section 27 policies and procedures.
• Constituent Entities of an MNE Group must register with the Competent Authority electronically and notify it immediately of any change to the information provided.
• A Constituent Entity responsible for filing must submit the country-by-country report no later than twelve months after the last day of the Reporting Fiscal Year.
• Failure to register, maintain required policies/procedures, or file returns, and willful provision of false information or false self-certification, constitute offences punishable by a fine of up to USD 100,000.

Applies to

Virgin Islands Financial Institutions, Reporting Financial Institutions, MNE Groups, Constituent Entities of MNE Groups, Ultimate Parent Entities

Deadlines

• 30th April, 2019: Existing Virgin Islands Financial Institutions must register with the Competent Authority.
• 30th April in the first calendar year following becoming a Virgin Islands Financial Institution: New Virgin Islands Financial Institutions must register with the Competent Authority.
• 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 to register with the Competent Authority for Country-by-Country reporting purposes.
• twelve months after the last day of the Reporting Fiscal Year: Deadline for filing the country-by-country report.
• 1st January 2018: Part IV (Country-by-Country Reporting provisions) is deemed to have come into force.

Related documents

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