Mutual Legal Assistance (Tax Matters) (No.4) Order, 2014 (SI 2014 No. 75)

Summary

This Order, made under section 3(3) of the Mutual Legal Assistance (Tax Matters) Act, 2003, gives domestic legal effect in the Virgin Islands to two intergovernmental agreements reproduced in its Schedule: the UK-BVI agreement to improve international tax compliance and the corresponding US-BVI FATCA agreement. By applying Part 1 of the Act to these agreements, it authorises and requires BVI Financial Institutions to identify, obtain and report information on Reportable Accounts for automatic exchange with the UK and US tax authorities.

• Scope: Applies to all BVI Financial Institutions falling within the definitions of Custodial Institution, Depository Institution, Investment Entity or Specified Insurance Company that are resident or have a branch in the Virgin Islands (Reporting BVI Financial Institutions).
• Due diligence: Reporting BVI Financial Institutions must apply the due diligence procedures in Annex I to identify UK Reportable Accounts and US Reportable Accounts held by Specified UK Persons or Specified US Persons (or entities they control).
• Information to obtain: Institutions must obtain account holder identifying details (name, address, date of birth, tax/National Insurance or TIN numbers as applicable), account numbers, balances/values and, for custodial and depository accounts, income and gross proceeds information.
• Reporting and exchange: The Virgin Islands (through its Competent Authority) must obtain this information from Reporting Financial Institutions and exchange it annually and automatically with HMRC (UK) and the IRS (US) under the respective agreements.
• Non-reporting and excluded accounts: The Schedule also sets out categories of Non-Reporting Financial Institutions and excluded/exempt products and accounts (e.g. certain escrow, retirement, and low-value accounts) that fall outside the reporting obligations.

The Order itself contains only two operative sections (citation and application), with the substantive rights and obligations set out in the full text of the two agreements annexed as the Schedule. It does not amend the underlying 2003 Act but activates its provisions in relation to these specific agreements.

Key obligations

• Reporting BVI Financial Institutions must apply the due diligence procedures in Annex I to identify UK Reportable Accounts and US Reportable Accounts.
• Reporting BVI Financial Institutions must obtain specified identifying and financial information on Account Holders and Controlling Persons of Reportable Accounts.
• The Virgin Islands must annually and automatically exchange the obtained Reportable Account information with the UK (HMRC) and US (IRS) competent authorities pursuant to the respective agreements.
• Sponsoring entities of Sponsored Investment Entities or Sponsored Closely Held Investment Vehicles must comply with the obligations in Annex II (subparagraphs III.B.2 and III.C.5) to retain non-reporting status for those entities.

Applies to

Financial Institutions, Custodial Institutions, Depository Institutions, Investment Entities, Specified Insurance Companies, Reporting British Virgin Islands Financial Institutions, Non-Reporting British Virgin Islands Financial Institutions

Deadlines

• 30 June 2014: Date used to define a 'Preexisting Account' as a Financial Account maintained by a Reporting BVI Financial Institution as of this date.
• annually: Reportable Account information must be obtained and exchanged with the UK/US competent authorities on an automatic basis every year.

Related documents

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