BVI Economic Substance – ITA Commences Audit Process

Following the introduction of the Economic Substance (Companies and Limited Partnerships) Act, 2018 (ES Act) and the passing of the deadline for the first filings thereunder to be made by BVI entities, the BVI International Tax Authority (ITA) has now begun making targeted audit requests to verify the "relevant activities" carried out by BVI entities which have made their mandated economic substance filings.

The questions raised by the ITA in these audit requests have included not only details of the business purpose, assets and day-to-day activities of the relevant entity, but also details as to what steps the entity took in order to make its determination as to what, if any, relevant activities were carried on by the entity during the financial period in question. It is therefore important that BVI entities properly document any legal advice which was obtained and their decision making process in determining their status under the ES Act (e.g. through written