British Virgin Islands - economic presence to be

On April 22, 2019, the British Virgin Islands (BVI) published a draft Economic Substance Code.

The Economic Substance Code is represented as a more comprehensive guide to the application of the Economic Presence Law which was adopted in December 2018.

The code will be adopted at the end of May 2019.

The requirement for an economic presence applies only for companies conducting the following activities:

• Banking;

• Insurance;

• Fund management;

• Financial activity and leasing;

•Shipping;

• Holding activity;

• Activity related to intellectual property;

• Activity of distribution and service centers.

In accordance with the Code the economic presence itself is as follows:

• Management and control of the company from the territory of the BVI;

• The company's board of directors should hold a sufficient number (for this type of activity) of meetings, physically attending the BVI and forming a quorum for decisions. Meeting decisions should be recorded and minutes should be kept in the BVI;

• The company must have a sufficient number of employees in the territory of the BVI;

• The company must bear the main expenses in the territory of the BVI;

• The company must have a real office in this jurisdiction.

Requirements for economic presence apply to foreign companies registered after January 1, 2019. For companies registered before January 1, 2019, there is a period by which they must eliminate all non-compliance with the requirements for an economic presence. It is December 31, 2019.

If the Tax Office of the BVI identifies non-compliance with the requirements for an economic presence from a foreign company, then the company will be charged a fine: for the first time in the amount of $ 5 thousand, and due to non-compliance with further requirements - $ 10 thousand and striking the company from the Register.

On materials of the following website: https://resources.harneys.com/acton/attachment/6183/f-c34586ba-5795-4ce0-bb87-7b4acf87db99/1/-/-/-/-/BVI%20ITA%20-%20Draft%20Economic%20Substance%20Code.pdf