On 28 December 2018, the British Virgin Islands published The Economic Substance (Companies and Limited Partnerships) Act, 2018 which came into effect on 1 January 2019 and was further amended on 30 January 2019 (the “Economic Substance Act”).
The Economic Substance Act was supplemented by the issuance of the draft International Tax Authority Economic Substance Code that was issued on 22 April 2019 (the “Guidance”).
The Economic Substance Act is responsive to global OECD Base Erosion and Profit Shifting (“BEPS”) standards regarding geographically mobile activities. Requirements of this type are rapidly being implemented on a level playing field basis by all OECD-compliant ‘no or only nominal tax’ jurisdictions.
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