The British Virgin Islands (BVI), a well-known offshore financial centre, has taken steps to align with international tax transparency standards, including the OECD’s Base Erosion and Profit Shifting (BEPS) initiative. Although the BVI is not an OECD member, it has adopted measures related to BEPS Action 13 on Country-by-Country Reporting (CbCR). This guide provides Chief Financial Officers (CFOs) and financial executives with a clear understanding of the CbCR requirements in the BVI, including its applicability, filing procedures, penalties for non-compliance, and important resources.

Applicability of CbCR in the British Virgin Islands

Criteria for Reporting:

• CbCR obligations in the BVI apply to multinational enterprise (MNE) groups with consolidated group revenue of €750 million or more in the preceding fiscal year.
• The reporting obligation typically applies to the ultimate parent entity of an MNE group that is a tax resident in the BVI or to a surrogate parent entity where applicable.
• Entities based in the BVI that are part of a multinational group headquartered outside the BVI should ensure compliance with CbCR requirements in the jurisdiction where the ultimate parent company is based.

Relevant Legislation:

• The legal framework for CbCR in the BVI is governed by the Mutual Legal Assistance (Tax Matters) (Amendment) (No. 3) Act, 2018 and associated regulations.
• These regulations implement the international obligations under BEPS Action 13 and set out the rules for MNE groups operating in or through the BVI.
• More information can be found on the British Virgin Islands International Tax Authority (ITA) website.

Reporting Requirements

Information to be Reported:

• The CbC report must include the MNE group’s global financial and tax data, including information on revenues, profits, taxes paid, stated capital, accumulated earnings, number of employees, and tangible assets.
• It must also specify details for each constituent entity within the group, identifying the tax jurisdiction of each entity and their primary business activities.

Form and Submission:

• The CbC report must be filed electronically using the standard XML format as prescribed by the OECD.
• Reporting entities in the BVI are required to submit their CbC reports through the BVI’s International Tax Authority (ITA) online portal.
  • More details on the filing procedure can be found on the ITA CbCR page.

Filing Deadlines

• The CbC report must be submitted within 12 months after the end of the fiscal year. For example, if the fiscal year ends on 31 December 2023, the report must be submitted by 31 December 2024.

Penalties for Non-Compliance

Penalties:

• Non-compliance with CbCR obligations, including failing to submit a report, submitting incomplete or inaccurate information, or failing to keep required records, can result in penalties.
• The BVI imposes financial penalties ranging from US$100,000 to US$400,000 for failing to comply with CbCR requirements, depending on the severity and duration of the non-compliance.

Defences:

• MNE groups may avoid penalties if they can demonstrate that there was a reasonable excuse for non-compliance. The ITA may review each case individually to determine if the circumstances warrant penalty relief.

Confidentiality and Use of Information

Data Protection:

• The BVI adheres to strict confidentiality protocols regarding the information submitted in CbC reports. The data provided in CbC reports is shared only with tax authorities in jurisdictions with which the BVI has a competent authority agreement.
• The information collected through CbCR is used for high-level risk assessment purposes and is not intended for public disclosure.

Conclusion

Compliance with Country-by-Country Reporting in the British Virgin Islands is essential for multinational enterprises that meet the revenue threshold. Understanding the applicable legislation, reporting requirements, and deadlines will help MNEs avoid costly penalties and ensure compliance with international tax standards. Engaging with local tax professionals and legal advisors who are familiar with CbCR regulations in the BVI will ensure that MNEs meet their obligations effectively.

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