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Services we DO and Services we DO NOT DO
Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly registered and licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency business activities.
TBA & Associates Tax Business Advisors Limited does not carry out any sort of Cryptocurrency Business Trade
BVI Economic Substance (Companies and Limited Partnerships) Act 2018
On 19 December 2018, the BVI government passed final legislation, entitled the “Economic Substance (Companies and Limited Partnerships) Act 2018” (Act) that introduces increased substance requirements for certain BVI-resident legal entities. Guidance notes also are expected to be released in due course.
The legislation is being introduced in response to concerns expressed by the Council of the European Union (EU) about the absence of clear general legal substance requirements for entities doing business in and through the BVI. The legislation reinforces BVI’s commitment to meet the requirements imposed by the EU Code of Conduct Group on jurisdictions that currently appear on the EU’s “grey list” as a result of these concerns. BVI and other grey list jurisdictions were provided with a deadline of 31 December 2018 for passage of domestic economic substance legislation.
Economic substance requirements
The measures in the Act apply as from 1 January 2019 (with a six-month transitional period for existing legal entities). The requirements apply to all BVI companies and limited partnerships with legal personality (LPs), unless they are considered non-resident for the purposes of the Act, and to all foreign companies and LPs doing business in the BVI that are engaged in “relevant activities.”
A non-resident company or LP is a company or LP that is resident for tax purposes in a jurisdiction outside of the BVI (provided the jurisdiction of tax residence is not on Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes).
The in-scope companies and LPs are referred to collectively as “legal entities” in the Act.
The legislation imposes economic substance requirements on any legal entity which carries on one or more of the following relevant activities:
- – Banking business
- – Insurance business
- – Fund management business
- – Finance and leasing business
- – Headquarters business
- – Shipping business
- – Holding business
- – Intellectual property business
- – Distribution and service centre business
The Act differentiates between a legal entity other than a pure equity holding entity, and a legal entity that is a pure equity holding entity.
Legal Entities other than a pure Equity Holding Entity
A legal entity (other than a pure equity holding entity) that engages in one or more relevant activities will be deemed to comply with the economic substance requirements if:
- – The relevant activity is directed and managed in the BVI;
- – There are an adequate number of suitably qualified employees in relation to that activity physically present in the BVI (whether employed by the relevant legal entity or by another entity and whether on temporary or long-term contracts);
- – Adequate expenditure is incurred in the BVI;
- – There are appropriate physical offices or premises for the core income-generating activities; and
- – Where the relevant activity is IP business and requires the use of specific equipment, that equipment is located in the BVI;- Having regard to the nature and scale of the relevant activity carried on in the BVI:
- – The legal entity conducts “core income-generating activity”; and
- – In the case of income-generating activity carried out for the relevant company or limited partnership by another entity:
- – No core income-generating activity is carried on outside the BVI;
- – Only that part of the activities of that other entity that are attributable to generating income for the relevant legal entity will be taken into account when considering if the relevant legal entity meets the economic substance requirements; and
- – The relevant legal entity is able to monitor and control the carrying out of that activity by the other entity.
Pure equity holding entity
A pure equity holding entity, defined as a legal entity that holds only equity participations in other entities and earns only dividends and capital gains, is subject to reduced requirements and is deemed to have adequate substance if the entity:
- – Complies with its statutory obligations under the BVI Business Companies Act 2004 or the Limited Partnership Act 2017, as appropriate; and
- – Has adequate employees and premises for holding equitable interests or shares and, where it manages those equitable interests or shares, has adequate employees and premises for carrying out that management.
Annual economic substance reporting
The Act also amends the Beneficial Ownership Secure Search System Act 2017 (BOSS Act) by imposing additional annual reporting requirements on legal entities with respect to their status and relevant activities.
All entities now must provide information regarding any relevant activities performed; details of the parent entity (if any) and the jurisdiction in which the parent is formed; and where the entity is registered on a recognised stock exchange, details of the stock exchange listing.
Legal entities which carry on a relevant activity and are not considered non-resident must provide the following information in relation to each such relevant activity, on an annual basis:
- – Total turnover generated;
- – Expenditure incurred within the BVI;
- – Total number of employees engaged in the activity;
- – Number of employees engaged in the activity within the BVI;
- – Address of any premises within the BVI used in connection with the activity;
- – Nature of any equipment located within the BVI used in connection with the activity; and
- – Names of the persons responsible for the direction and management of the activity, together with their relationship to the company and whether they are resident in the BVI.
Entities carrying on an intellectual property (IP) business must provide additional information, whereas non-resident companies and LPs only are required to specify the jurisdiction in which they are tax resident and provide evidence to support that tax resident status.
The expectation is that the information will be submitted by the entity’s registered agent and integrated into the BVI’s existing BOSS system. Further guidance regarding the availability of the updated BOSS system and confirming the deadlines for the first substance reporting is expected to be released in due course.
Penalties and other sanctions for noncompliance
The Act outlines a notice process with graduated penalties to be applied for failure to meet economic substance requirements following each subsequent notice. The maximum penalty is USD 400,000 for a high-risk IP legal entity and USD 200,000 for all other legal entities.
The BVI International Tax Authority ultimately may recommend that the Financial Services Commission strike the legal entity off the Register of Companies or the Register of Limited Partnerships where either the economic substance requirements are not met after the second notice or it decides there is no realistic possibility of the legal entity meeting the economic substance requirements.
Potentially affected entities should begin to assess the application of the law and, where appropriate, plan and implement steps to ensure compliance with the economic substance requirements as soon as is feasible. The following actions should be considered:
- – Confirming which entities within a structure are within the scope of the legislation, and whether any BVI entities are considered non-resident companies or LPs;
- – Classifying structures on an entity-by-entity basis to flag those that undertake a relevant activity and, therefore, fall within the scope of the new requirements;
- – Considering current and future compliance for entities that undertake relevant activities with respect to the substance requirements outlined;
- – Considering the means by which compliance with the economic substance tests will be documented and evidenced; and
- – Considering any operational or structural changes that may be required to meet the substance requirements.
What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.
Whilst most providers either specialise on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types.
Therefore TBA combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs.
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