Following the Global Forum (OECD) Peer Reviews some recommendations in regards to accounting records keeping were presented in order to ensure the BVI ability to co-operate with other tax administrations in accordance with the internationally agreed standard. BVI Business Company record keeping requirements have been amended with the 2012 and 2014 amendments to the Mutual Legal Assistance (Tax Matters) Act, 2003. These changes are an addition to already existing record keeping requirements as expressed in the BVI Business Companies Act, 2004.
What are the changes?
Section 98 of the BVI Business Companies Act has always required BVI Business Company to keep records that:
- are sufficient to show and explain the company’s transactions; and
- will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
The amendments to the Mutual Legal Assistance (Tax Matters) Act, 2003 introduced guidance and clarifications to the new record keeping requirements. Existing and new BVI Business Companies now are required:
- To maintain records and “underlying documentation”;
- To retain the records for a period of at least five years from the date of completion of the transaction to which the records and underlying documentation relate, except if the company before the expiration of the five-year period terminates the business relationship to which the records and underlying documentation relate;
- To ensure that the records are sufficient to illustrate a company’s transactions and determine its financial position:
- all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
- all sales and purchases of goods by the company; and
- the assets and liabilities of the company;
- For the records and underlying documentation to be kept at the office of its registered agent, or at such other place or places, within or outside the Virgin Islands but if not kept at the office of the registered agent, a record of the location where they are kept must be given to the registered agent.
What if the company does not comply?
Under Section 98 of the BCA, a company that contravenes its record keeping obligation commits an offence and is liable to a fine of US$10,000.
There are no penalties under the Mutual Legal Assistance Act, however BVI Company is required to comply with BVI International Tax Authority requests, further the BVI tax authority is responsible to comply with requests from overseas tax authority requests, depending on Tax Information Exchange Agreements to which BVI is a party.
How is it in other jurisdictions?
Account records keeping requirements in Seychelles is for IBCs to file annual return with its Registered Agent, you can read more here.
Account records keeping requirements in Belize also require for IBCs to prepare and keep its accounting records, you can read more here.
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