Updated Common Reporting Standards (CRS) guidance notes released
On 19 February 2019, the Virgin Islands International Tax Authority (ITA) published an updated version of the Common Reporting Standard (CRS) guidance notes for the British Virgin Islands (BVI).
The updated guidance notes clarify several changes that were introduced for the 2018 reporting year via an amendment to the Mutual Legal Assistance (Tax Matters) Act published in October 2018.
A number of the key updates to the CRS guidance notes are highlighted below:
- Registration of non-reporting financial institutions (NRFIs): The updated guidance notes reinforce the new requirement for NRFIs to register in the BVI Financial Accounts Reporting System (BVIFARS), and extend the registration deadline to 28 June 2019 for NRFIs only. The annual registration deadline remains 30 April 2019 for reporting financial institutions (RFIs).
- Nil reporting: The amended legislation introduced mandatory nil reporting starting with the 2018 reporting year. The updated guidance notes clarify that only RFIs will be required to submit a nil report (i.e. NRFIs will not need to submit nil reports), and that this will be achieved through an annual CRS filing declaration that will be added to the BVIFARS. The 2018 CRS reports (including nil reports) are due by 31 May 2019.
- Policies and procedures for NRFIs: The amended legislation also introduced a requirement for all Virgin Islands financial institutions (VIFIs) to establish, implement and maintain written CRS policies and procedures. The updated guidance notes clarify that, for NRFIs, it will be sufficient to simply outline the facts and analysis leading to the NRFI classification, and the policies for regularly reviewing the entity’s circumstances to ensure the status still applies. For trustee-documented-trusts (TDTs), the trustee’s policies and procedures would be expected to apply to all of its TDTs, and those TDTs would not be expected to have their own written policies and procedures.
- Transition period for policies and procedures: The revised guidance notes clarify that the ITA will not consider a VIFI to be in breach of the new policies and procedures requirement if the policies and procedures are in place by 31 March 2019.
- Collection of self-certifications for new accounts: The guidance notes have been updated to confirm that if a self-certification cannot be obtained for a new account within 90 days of the account opening, the account should be closed. This is aligned with the OECD CRS-related FAQ regarding the need for jurisdictions to have strong measures in place to ensure that valid self-certifications always are obtained for new accounts.
- Ownership threshold for controlling persons: The revised guidance notes clarify that all VIFIs must apply a 10% ownership threshold when determining the controlling persons of an account holder. This is aligned to the BVI anti-money laundering laws.
It is anticipated that a revised BVIFARS user guide will be released in due course, which will provide additional procedural guidance on the various changes being made to the system.