New BVI Economic Substance Laws And Initial Structuring Considerations

A. Background Information

The BVI Government introduced, with effect from 1 January 2019, a new legislation titled the Economic Substance (Companies and Limited Partnerships) Act 2018 (the Law), requiring certain legal entities to demonstrate adequate economic substance regarding taxation in the BVI. Any company registered in the BVI going forward must adhere to the new guidelines which have been implemented as a result of OECD guidance and concerns from the EU Code of Conduct Group (COCG).

Similar laws were introduced in other zero or low corporation tax jurisdictions such as Belize, Seychelles, Mauritius, Cayman Islands, Bermuda, Jersey, Guernsey and the Isle of Man.

In short, the Law introduces economic substance requirements for all companies and limited partnerships which are registered and tax resident in the BVI. The Law mandates that every Corporate Services Provider registering a company that falls under the scope of the Law will have to know where the