In the fifteenth and final episode of Harneys’ Substance on Substance series for 2019, Philip Graham and Joshua Mangeot (plus special guest George Weston) examine the journey of economic substance in the BVI to date, from the inception of the Act to the final ITA Rules and discuss how BVI entities are coming to terms with these developments. 

Key takeaways

-We are seeing an increasing level of conversancy with the key concepts of economic substance, following the draft ITA Code being released in April and the final Rules being released in October

-We are seeing an increasing amount of entities classifying in order to ensure they are compliant with the new requirements – many entities are finalising their classifications, finding out whether they are affected at all or whether they are exempt or are passive “pure equity holding entities”, in which case no or very few changes will be required

-Based on user feedback, we have updated our BVI Economic Substance Classification Solution (which is available at https://economicsubstance.vg), building out the functionality and expanding Harneys’ legal advice given to users throughout the process and to provide board resolution template wording for more straightforward cases

-A large number of entities have progressed passed the classification stage and it is encouraging to see how many people are putting substance solutions in place (such as holding board meetings, appointing local directors and developing their presence in the BVI)

-Ultimately, it is companies’ and other legal entities’ obligation under BVI law to identify whether they have relevant activity and if so, to take steps to ensure compliance – if entities have not yet considered this and classified themselves, we strongly recommend that they do so

Whilst this is the last episode of the Substance on Substance series, more updates and a new podcast series will be coming your way in the new year; stayed tuned and thanks for listening!  If you would like to subscribe to our client alerts on economic substance, please visit https://www.harneys.com/newsletter/.