BVI Explains Economic Substance Requirements During COVID-19 Outbreak
by Mike Godfrey, Lowtax.net, Washington
15 April, 2020
The British Virgin Islands' International Tax Authority (ITA) has provided guidance on how companies can meet the economic substance rules during the coronavirus outbreak.
The ITA does not currently intend to make any changes to previously announced deadlines for complying with the economic substance rules, country-by-country reporting, the common reporting standard, the exchange of information on request, or FATCA. All Notices to Produce Information will be issued by the ITA electronically, and the ITA is encouraging responses to be sent electronically where possible.
In respect of the economic substance rules, the ITA intends to adopt a "reasonable and practical approach" where entities need to make adjustments to their operating practice in order to mitigate the threat posed by the coronavirus.
The ITA said that companies, where possible, should seek to appoint alternate directors present in the islands in order to meet the economic substance requirements. Given social distancing protocols, only board meetings related to core income generating activities will need to be held in the islands, and only as many directors as are required to make the meeting quorate will need to attend.
The ITA said that where it is still not possible to hold a board meeting in the islands or to meet some other substance requirement due to restrictions in place in the islands or elsewhere, entities should retain documentation to support such claims for the periods affected.
The ITA said that these are temporary arrangements and that entities should make every effort to otherwise comply with the substance requirements, including filing deadlines.
The islands' economic substance requirements have been effective since January 1, 2019.
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