This development follows the significant amendments to the ITA Act made in 2022 to increase the ITA’s investigation and enforcement powers, which are discussed in our client guide available here.

From most clients’ perspective, the key points to note are broadly as follows:

• All companies and limited partnerships registered in the BVI (Entities) should be aware of their obligation under the ITA Act to maintain “adequate systems and controls” to ensure compliance with the ITA Act, “mutual legal assistance legislation” (which as defined broadly includes the BVI’s beneficial ownership reporting, country-by-country reporting (CbCR), economic substance compliance and reporting and FATCA/CRS regimes) and any directives, guidance or rules issued by the ITA (if applicable to the Entity).
• However, the 2023 amendments repeal the requirement introduced in 2022 to maintain a written compliance procedures manual in this regard. This will be a welcome change but we do generally recommend that Entities maintain robust records (which may include resolutions) to demonstrate that their director(s) or general partner(s) have considered any relevant requirements and have put in place adequate systems and controls as appropriate.
• The ITA has broad powers to issue and revise official guidance and rules in relation to the foregoing. The most recent example is the ITA’s rules on economic substance in the BVI, which were updated (as version 3) on 23 February 2023.

The amendments also introduce a new “local company” exemption, which in our view is intended to exempt local businesses that do not operate or have any presence outside the BVI from unnecessary regulatory reporting requirements driven by international commitments, where appropriate.

For a copy of the amendments, please refer to the International Tax Authority (Amendment) Act 2023 here.