British Virgin Islands entities who have determined that they are Reporting BVI Financial Institutions ("Reporting FIs") for the purposes of the Foreign Account Tax Compliance Act of the United States ("FATCA") and recently registered with the US Internal Revenue Service ("IRS") for a Global Intermediary Identification Number ("GIIN") should now be taking steps to identify any accounts they hold for which information will need to be reported to the BVI International Tax Authority ("ITA") for onward transmission to the IRS.
The account identification process will require a due diligence exercise to be undertaken to determine:
- which financial accounts may be exempted from reporting by virtue of their nature, or their de minimis account value thresholds;
- whether the accounts should be classified as pre-existing individual or entity accounts (accounts maintained as at 30 June 2014) or new individual or entity accounts (accounts opened on or after 1 July 2014); and
- whether there is sufficient due diligence information retained in order to determine whether an account may be reportable; or
- what further due diligence information needs to be obtained in respect of the accountholders to determine whether an account may be reportable; i.e. whether the account is held by a Specified US Person or a Passive NFFE with Controlling Persons that are Specified US Persons (as defined in the intergovernmental agreement entered into with the United States) (the "US Reportable Accounts").
Once it has been established that an account held by a Reporting FI is a US Reportable Account, the following information will need to be provided to the ITA in respect of that US Reportable Account for 2014:
- the name, address, US Tax Identification Number ("TIN") of the entity or individual accountholder and, where the accountholder is a Passive NFFE that has controlling persons who are Specified US Persons, the name, address and TIN of such persons;
- the account number;
- the name and identifying number of the Reporting FI; and
- the account balance or value as of the end of 2014.
This information was to be transmitted to the ITA before 31 May 2015, however this deadline has been extended to 30 June 2015 for the reports for 2014. The ITA is currently putting processes in place to allow for the transmission of this information electronically through an online portal known as the BVI Financial Account Reporting System ("BVIFARS"). Details relating to the use of BVIFARS are contained in the final Guidance Notes1 dated 20 March 2015.
Reporting FIs will be required to enrol with BVIFARS the first time they wish to access the system and this enrolment application will need to be approved by the ITA before access is granted. There is no deadline for completion of the enrolment process however access to BVIFARS will not be available to the public until mid-April 2015. The ITA has confirmed that although Reporting FIs with no US Reportable Accounts are not required to enrol on BVIFARS or file a nil return, it will be possible for such Reporting FIs to enrol and submit a nil return through BVIFARS if they wish to do so.
Similar reporting requirements are contained in the intergovernmental agreement entered into with the United Kingdom, however the deadline for filing information for 2014 in relation to UK reportable accounts has been extended until 31 May 2016 and the exact format of this reporting has yet to be finalised. As a due diligence exercise needs to be completed in respect of high value pre-existing individual accounts prior to 30 June 2015, it is advisable to conduct the UK reportable accounts due diligence exercise in tandem with the exercise being undertaken in respect of US Reportable Accounts.
As set out above, reporting in respect of US Reportable Accounts must be submitted to the ITA through BVIFARS prior to 30 June 2015. Reporting FIs that are required to submit a return must have registered with the IRS and obtained a GIIN prior to enrolling on BVIFARS.