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Country-by-country reporting guidance notes released

Virgin Islands International Tax Authority (ITA) publishes highly anticipated country-by-country (CbC) reporting guidance notes for the British Virgin Islands (BVI).

Overview

On 19 February 2019, the Virgin Islands International Tax Authority (ITA) published highly anticipated country-by-country (CbC) reporting guidance notes for the British Virgin Islands (BVI).

The guidance notes provide important clarifications regarding a number of practical aspects of the implementation of CbC reporting in the BVI, including confirmation that the first CbC reporting notification deadline will be 30 April 2019.

CbC reporting was introduced in the BVI via an amendment to the Mutual Legal Assistance (Tax Matters) Act published in October 2018, which brought provisions in line with the OECD's BEPS action 13 final report into effect. As described below, the first CbC reports (for reporting fiscal years that began on 1 January 2018) will be due in the BVI by 31 December 2019.

The guidance notes provide additional detail regarding the CbC reporting registration and reporting process, deadlines and other important notes. A number of key points from the guidance notes are highlighted below:

 

Registration deadline

  • Any constituent entity of an in-scope multinational enterprise (MNE) group that is resident in the BVI must register with the BVI ITA. Registration serves the purpose of the CbC reporting notification, through which a constituent entity informs the ITA of whether it is the ultimate parent entity (UPE) or surrogate parent entity (SPE) of the group that will file the group’s CbC report; if it is not the UPE or SPE, it must provide information regarding the identity and tax residence of the reporting entity.
  • Registration generally is due no later than the last day of the reporting fiscal year of the group, although the guidance notes confirm that for those constituent entities where the reporting fiscal year of the MNE group ends on or before 30 April 2019, the deadline has been extended to 30 April 2019.

Registration process

  • Registration will be required only once; however, any changes to the registration details must be communicated to the ITA.
  • Eventually, all CbC reporting registrations will be submitted via the BVI Financial Accounts Reporting System (BVIFARS). However, as the ITA is still in the process of updating the BVIFARS to accommodate CbC reporting requirements, all registrations are required to be submitted via email in the interim.
  • Detailed instructions regarding the email submission process are provided in the guidance notes, and templates for the excel file and authorization letter that must be provided can be found on the government’s website.

Registration for individual constituent entities

  • The guidance notes confirm that each constituent entity is required to register individually with the ITA, as opposed to a single registration for the MNE group.
  • However, while the interim email registration process is in place, the ITA will permit constituent entities of the same MNE group to submit their registration information in a single email with a single Excel file attached, provided that each constituent entity of the MNE group provides its information in a separate sheet within that Excel file.
  • The ITA also will permit a single authorization letter appointing a primary user for the BVIFARS to be used for all constituent entities of the same MNE group (following the template provided).

Reporting process and deadline

  • Where the reporting entity for an MNE group is resident in the BVI, the guidance confirms that CbC reports will be required to be filed in the BVI for all periods commencing on or after 1 January 2018.
  • It is anticipated that all CbC reports will be submitted via the BVIFARS, and further guidance on the submission process will be provided in due course. All CbC reports must confirm to the CbC reporting XML schema format published by the OECD.
  • The CbC report is due no later than 12 months after the last day of the reporting fiscal year of the MNE group; accordingly, the first CbC reports (for reporting fiscal years that began on 1 January 2018) will be due in the BVI by 31 December 2019.

Master files and local files

  • The guidance notes confirm that the BVI does not require a reporting entity to submit either a master file or local file, as referenced in the OECD BEPS action 13 final report.

Affected companies are recommended to review the CbC reporting guidance notes in full and to understand the impact on their business.

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