On 1 December 2023, the International Tax Authority (Administrative Penalties) Regulations 2023 were gazetted and have come into force. These regulations empower the BVI International Tax Authority (ITA), with the approval of the Cabinet, to impose penalties on individuals or legal entities found in violation of legislation supervised by the ITA under the International Tax Authority Act, Revised Edition 2020 (the ITA Act). The Regulations revoke the previous International Tax Authority (Administrative Penalties) Regulations, 2022.

The new Regulations are relevant to all BVI companies and limited partnerships and will be of critical importance to any entity that has dealings with the ITA and considerably increase the potential range of enforcement risks faced by the private sector. The “mutual legal assistance legislation” covered by the Act includes:

• the Beneficial Ownership Secure Search System Act, Revised Edition 2020
• the Economic Substance (Companies and Limited Partnerships) Act, Revised Edition 2020, and
• the Mutual Legal Assistance (Tax Matters) Act, 2003 (MLAT), among others

It should be recalled that the MLAT regulates the BVI’s implementation of FATCA, the Common Reporting Standard (CRS) and Country-by-Country Reporting (CbCR) as well as the full range of Tax Information Exchange Agreements (TIEAs) that the BVI has entered into over the years.

Further to the enhanced regime, all BVI companies and limited partnerships should now ensure they to establish and maintain adequate systems and controls to ensure compliance with the mutual legal assistance legislation, with certain very limited exceptions.

The new regulations outline the procedures and conditions for imposing administrative penalties on individuals or legal entities that violate provisions of the Act or mutual legal assistance legislation or statutory documents made thereunder, such as rules issued by the ITA. A statutory limitation regime is included in the amendments, as is an appeals process. Also included is a schedule detailing various administrative penalties based on specific contraventions, such as late filing, providing false information, failure to comply with notices, compliance contravention, late payment, and other unspecified contraventions.

The International Tax Authority (Administrative Penalties) Regulations, 2023 can be found here.

The International Tax Authority Act (Revised Edition 2020) can be found here.