As announced in our earlier eAlert, the Government of the British Virgin Islands (BVI) enacted the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act) effective 1 January 2019.
The Act requires certain BVI entities carrying on specified activities to have 'adequate substance' in the BVI. The Act applies to "legal entities" carrying on "relevant activities", other than non-resident companies, non-resident limited partnerships and limited partnerships which have elected not to have legal personality. For additional particulars of the Act, please refer to our eAlert of 2 January 2019.
Since the Act was published, BVI's legal community has been awaiting the issuance of Government guidance to assist in determining if a particular entity is carrying on a relevant activity and, if so, whether it meets the applicable economic substance requirements (for instance, the definition of 'adequate' in the context of each "relevant activity" and in various circumstances).
We are pleased to advise that BVI Finance announced on 29 March 2019 that, with the assistance of external draftsmen, progress is being made with the drafting of the BVI Government's guidance, termed the Economic Substance Code (the Code). BVI Finance anticipates that the draft Code will be published in late April 2019. This is to be followed immediately by an education campaign in the BVI, followed by a similar campaign in Hong Kong for the Asian market. Publication of the Code in finalised form is expected shortly after the conclusion of these campaigns.
Once the draft Code has been published, we will be in touch with more information about how we expect our client base to be impacted by the legislation, as clarified by the guidance. In the meantime, if you have any questions, please reach out to your usual Appleby contact or a member of the team below.
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