The British Virgin Islands Government recently announced the extension of the 2017 deadlines for notification and reporting obligations under the Common Reporting Standard, or CRS. As a result, BVI financial institutions will now have until June 30, 2017 to register with the BVI International Tax Authority (ITA) on the ITA's reporting portal. Reporting BVI Financial Institutions will now have until July 31, 2017 to file reports.
What is CRS?
CRS is new global standard endorsed by the Organisation for Economic Co-operation and Development (OECD) along with G20 countries and others regarding the exchange of account information between tax authorities in various jurisdictions. It builds on the framework developed in the Intergovernmental Agreements designed to implement the United States' Foreign Account Tax Compliance Act (FATCA). CRS is often referred to as global FATCA, given that it aims to facilitate a wider and more uniform basis for information exchange among tax authorities across the world. However, an important difference from FATCA is that CRS reporting obligations flow from an individual's tax residency, as opposed to citizenship.
Over 58 countries have formally committed to early adoption, including the BVI.
BVI legislation, which came into force on January 1, 2016 now requires the domestic implementation of CRS, and specifically sets out the obligations of Reporting Financial Institutions (RFIs) under the Mutual Legal Assistance (Tax Matters) (Amendment) (No. 2) Act, 2015. The BVI Government has also published Guidance Notes in relation to CRS.
Under CRS, RFIs are obligated to collect and report account information. RFIs include:
- Depository Institutions: Savings banks, commercial banks, loan associations and credit unions.
- Custodial Institutions: Custodian banks, brokers and central securities depositories.
- Investment Entities: Entities investing, reinvesting or trading in financial instruments, portfolio management or investing, or managing financial assets.
- Specified Insurance Companies: Generally, this includes most life insurance companies.
It is therefore important that an entity determines its classification under CRS since that will determine what it obligations under CRS might be.
An RFI will be required to:
- apply certain due diligence procedures to all of its account holders to determine whether the account holder or controlling person is tax resident in a participating jurisdiction;
- retain the due diligence information and a record of the procedures taken to comply;
- appoint and notify the ITA with the contact details of an individual authorised to be the principal point of contact for the RFI; and,
- electronically report to the ITA, via the ITA's reporting portal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.