• Staff

ES Reporting Requirements for BVI

Updated: Mar 10, 2020

The Economic Substance (Companies and Limited Partnership) Act 2018 (as amended) (“the Act” or “the legislation”) sets out the requirements for entities in terms of substance. A draft Code accompanies the Act currently. The BVI business world has been eagerly awaiting the release of the final Code; anticipating this would be released prior to 30 June 2019, the start of the first default financial period for BVI entities established before 1 January 2019 (“existing BVI entities”).

Instead, and at the “eleventh hour” the BVI released a Statutory Instrument (SI 2019 No. 41, Economic Substance (Companies and Limited Partnerships) Act, 2018 (published in the Gazette 28 June 2019)), which has the effect of delaying the coming into force of Section 16 of the Act.

Section 16 amends the Beneficial Ownership Secure Search System Act 2017 (“the BOSS Act”).

This Section will not now come into force until 1 October 2019. This is the Section that imposes additional annual reporting requirements on entities that fall within the scope of the legislation, with respect to their relevant activities and operating model. Whilst this change is important to the legislation, it does not overly affect what or when an entity is required to report, nor by when entities are required to be compliant or need to establish economic substance.

What it does mean is:

  • The Act is not repealed and remains in full force and effect except with respect to Section 16. 

  • The Code remains in draft, as a guide to the operation of the legislation.

  • SI 2019 No.41 confirms Section 16 of the Act (i.e. the self-reporting regime under the Boss Act) will now come into force on 1 October 2019, rather than it becoming law by default on 30 June 2019.

  • There is no change to the annual reporting obligations under the legislation, which obligation commences for each entity at the end of its first financial period (i.e. the first default financial period being 12 months from the date its establishment for entities established on or after 1 January 2019 (new entities) and 30 June 2019 for existing BVI entities) and continues annually thereafter in respect of each subsequent financial period.

All entities are required to be compliant with the Act as it relates to the establishment of economic substance.

Anticipated Reporting Requirements

“In-Scope" Entities

Upon Section 16 of the Act coming into force, entities that carry out a relevant activity must submit information on their relevant activities to their registered agents.

Entities that carry out a relevant activity and are in scope for the substance requirements must provide the following information in relation to the relevant activity (and each if more than one), on an annual basis:

  • Amount and type of gross income by relevant activity in the BVI

  • Amount of operating expenditure by relevant activity in the BVI (excluding capital);