On September 2014 the BVI passed a new legislation introducing a fundamental amendment to the Mutual Legal Assistance Tax Matter Act, clarifying the applicable record keeping obligations for BVI Companies, Partnerships, Trusts and other organisations.
The amendments in the legislation were introduced based on the Organisation for Economic Co-operation and Development (OECD) Peer Reviews of the Territory, in order to meet the evolving global standards and clarify the type of “records and underlying documentation” that have to be maintained by BVI companies and partnerships.
The new changes to the MLAT (Tax Matters) Act 2003 came into effect on September 16th 2014. No amendments have been made to the BCA itself.
More precisely, Section 98 of the BVI Business Companies Act 2004 (BCA) has always provided that a BVI business company must keep records that:
Moreover, section 5A(1) of MLAT applies to all companies registered under the BCA and provides 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 recently amended Section 5A(5) specifies which documents are essential as the “records and underlying documentation” required to “show and explain” the transactions of a BVI Business Company (the “Company”), in order to determine the financial position of the Company accurately.
every company shall keep "records and underlying documentation".
such records and underlying documentation may 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.
every company shall retain the records and underlying documentation for a period of at least five years from the date of completion of the transaction to which the records and underlying documentation relate; or the company terminates the business relationship to which the records and underlying documentation relate.
The term "underlying documentation" is defined as including "accounts". However, the requirement to keep "accounts" does not mean that a Company has an obligation to produce and maintain financial statements.
The obligation to keep "accounts" under the MLAT means keeping "accounting records" which:
Therefore, the records must be construed to include:
correctly explain all transactions
enable the financial position of the Company to be determined with reasonable accuracy at any time
allow financial statements to be prepared
are accompanied by underlying documentation such as invoices and contracts that show:
accounts in relation to:
Please note that the records and documentation to show and explain the transactions of a Company are not required to be kept with the Registered Agent of the Company, nor in the BVI registered office of the Company, however must advice in writing within fourteen days after any change with respect to said location. For any further information or clarification please contact us at firstname.lastname@example.org
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.
To read online the full legislation please click here.
With reference to:
Colin Riegels, Ross Munro, Aki Corsoni-Jussain and Philip Graham, Harneys, 2.12.14.
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