BVI Passes The Economic Substance (Companies and Limited Partnerships) Act

According to the announcement of BVI Premier and minister of finance, Dr Orlando Smith, the territory has passed The Economic Substance (Companies and Limited Partnerships) Act, 2018, which came into force on January 1, 2019. This is an important legislation addressing the EU’s concerns over “economic substance”, ahead of the December 31 deadline set by the European union for the British Virgin Islands and other financial centres.

In his comments BVI Premier said: “The government has engaged closely with EU officials over the last 18 months to understand and address the concerns that have been raised and has consulted on a regular basis with representatives of the financial services industry. Dialogue with the industry will continue to ensure smooth implementation of the new requirements and the International Tax Authority is issuing a guidance note to accompany the new Act.” 

Also, the BVI government admitted that the legislation will create challenges for some companies and limited partnerships, mostly due to the compressed timeline. It is expected that the formal response of the European Union will be given after some months.