Economic Substance for BVI struck off companies
Following the implementation of recent legislation in the BVI, the Economic Substance (Companies and Limited Partnerships) Act, 2017 (the “Act”) is now in force in the BVI and requires BVI entities that are tax resident in the BVI and engaged in one of nine relevant activities to have adequate economic substance in the Territory. In addition, the Act requires BVI entities to file an annual return to the BVI International Tax Authority (“ITA”). Companies that fail to have adequate economic substance or fail to file an annual return are liable to enforcement action by the BVI International Tax Authority and significant penalties, including fines and terms of imprisonment may be imposed.
Even if your BVI entity was recently struck off or is in the process of being struck off, the Act does not exempt struck off companies from complying with the requirements to have adequate substance or to file an annual substance return if the entity is restored.
Struck off entities that are restored to good standing after 29 December 2020 will have an obligation to file an annual return with the ITA and will likely face penalties immediately upon restoration, as the deadline for filing the annual return will have passed.