Offshore Business Update: British Virgin Islands

Originally published by Appleby

Written byAndrew Willins, Shana Simmonds

In this update, we will provide a rolling overview of how the authorities in the British Virgin Islands are continuing to respond to the evolving global COVID 19 pandemic. In particular we will focus on the impact to filings, ability to conduct searches, certificates of good standing, other relevant searches, court sessions, travel restrictions and the implications for Economic Substance compliance and residency. In addition we will also provide updates of any other temporary regulatory measures in place that might affect any ‘business as usual’ processes.

The British Virgin Islands (BVI) Government has taken proactive measures which are designed to control, suppress and prevent the spread of COVID-19 in the BVI by restricting access to the BVI, curfews and encouraging social distancing.

On 26 May 2020, the BVI Government reported that there are no active cases of COVID-19 in the BVI.

Effective 4 June 2020, all approved businesses are permitted to operate between the hours of 5:00 a.m. – 10:00 p.m. daily.  A curfew remains in effect outside of those hours.

The Appleby BVI office has reopened with the usual hours of operation (9:00 a.m. – 5:00 p.m.).

1. Filings

COMPANY FILINGS

The BVI’s Virtual Integrated Registry Regulatory General Information Network (VIRRGIN) is the main means of obtaining publicly available information, lodging filings and registrations for BVI Business Companies. It is an electronic system and its functionality has not been affected by measures put in place to deal with COVID-19. All filings/registrations can be undertaken electronically through VIRRGIN in the usual manner.

ANNUAL LICENSE FEES

Investment business licensees, mutual funds, and approved managers were being encouraged, where practical, to comply with the deadline of 31 March 2020 for the payment of annual licence fees. However, the BVI Financial Services Commission (Commission) will not apply nor issue penalty fees for late submission until after 30 April 2020.

Payment of annual fees for foreign companies was due on 31 March 2020. Foreign companies that did not submit annual fees by midnight 31 March 2020 will incur a 10% penalty fee.

2. can Searches be conducted?

COMPANY SEARCHES

Company Searches can be undertaken electronically via VIRRGIN, which is operational in the usual manner.

COURT SEARCHES (JEMS, PROBATE, E-LITIGATION PORTAL)

The Court Office has resumed its usual opening hours.

Online court searches are discontinued with the provision that if law firms are unable to conduct searches in person they may request written continuation of online searches by email.

3. Certificates of good standing and apostille – if and how these are being conducted

Certificates of Good Standing for BVI companies are available electronically via VIRRGIN, with the hard copies being available for pick up daily.

Apostilles can be processed in the usual manner.

4. Other searches – how are these being conducted?

N/A

5. Court sessions and position (including filings and hearings) – updated

The resolution of disputes in the Commercial Court is an important part of the infrastructure in the BVI and the Court intends to adopt a business as usual approach whilst ever this is possible.  To facilitate that, an Emergency Measures Practice Direction came into force on 23 March 2020.  That Practice Direction has since been revised thrice.  In practice, what this means is that:

COURT FILINGS

In respect of all matters that have been issued since the advent of e-filing, all filings can be undertaken electronically through the E-Litigation Portal in the usual manner.

Documents may be filed in all matters that are not currently subject to the E-Filing regime by attendance at the High Court Registry.  However, restrictions consistent with social distancing policies on access to the Registry have been applied, with the result that this process may now take a little longer.

Arrangements have been made for documents to be filed electronically by email in all non E-Litigation Portal cases, if accompanied with an undertaking given by a Legal Practitioner to pay the relevant fees.

The Judiciary are currently accepting electronic bundles and the submission of written submissions electronically.

COURT HEARINGS

The Court is attempting to adopt a “business as normal” approach. The COVID-19 Emergency Practice Direction has been fine tuned since March and is now on its fourth iteration. The Practice Direction records that “the objective is to undertake as many hearings as possible remotely” with face to face hearings discouraged. Paragraph 5.3 of the Practice Direction provides that “nothing in the Practice Direction derogates from the judicial officer’s duty to determine all issues that arise in the case judicially and in accordance with normal principles.”

In the Commercial Division, the Court list is being heard as normal, but with the vast majority of matters being heard by video conference or telephone. The Court will nevertheless facilitate face to face hearings where that is appropriate. The Resident Commercial Judge is currently hearing an 8 day trial remotely, and has adjusted court hours to suit those participating in Asia. It has also been hearing a heavy three day hearing remotely.

Consistently with the COVID-19 Emergency Practice Direction, in the High Court, a majority of hearings are taking place remotely. However, physical hearings are taking place where necessary – principally for trials and committal applications.

COURT OF APPEAL

The Court of Appeal is an itinerant Court that travels from a jurisdiction in which in COVID-19 is present. It therefore took the precautionary step of suspending its sitting in the BVI in March 2020. That sitting has been rescheduled for 20 – 24 July, and the Court will be hearing those appeals remotely. In the meantime, it has been delivering judgments and dealing with applications remotely.

ARBITRATION

The BVI International Arbitration Centre has made provisions to deal with hearings remotely.

PROBATE AND ADMINISTRATION OF ESTATES

Probate applications can be filed in the usual manner

6. Any travel restrictions

The BVI borders are closed until 16 June 2020 to persons who wish to visit the BVI who have travelled from or through certain jurisdictions. Those jurisdictions include China, Italy, Iran, South Korea, France, Spain, Germany, USA, UK, Switzerland, Norway, Turkey, Belgium, Netherlands, Canada, Austria, Portugal, Israel, Sweden, Brazil, Dominican Republic, Argentina, Costa Rica, Cuba, Puerto Rico, USVI, Guadeloupe, Martinique, Australia, Russia, Ireland, Czechia, Chile, Denmark, Poland, Romania, Malaysia, Ecuador or such other jurisdiction as be published in the BVI Gazette.

The BVI’s borders are also closed until 16 June 2020 (unless otherwise extended) to all persons save for Virgin Islanders, Belongers, Permanent Residents and Naturalised Citizens).

Such persons may enter the BVI from 2 June 2020 provided that:

·         such persons can demonstrate that he or she can be accommodated in approved private quarantinable housing or premises for at least 14 days upon arrival in the BVI; and

·         such housing or premises have been certified, following registration by the Environmental Health Division.

7. Other Temporary Regulatory Measures

The BVI Government imposed a limited curfew with effect from Thursday 4 June 2020 between the hours of 10:00 p.m. to 5:00 a.m. daily.

Face-to-face meetings and in-person visits to the Commissions’ BVI Office are by appointment only.

The Commission’s Asia Representative Office is open to the public by appointment only. In-office processing of transactions continues daily from 10:00 a.m. to 4:00 p.m.

The Financial Services (Exceptional Circumstances) Act, 2020 (FS Act) came into force on 28 March 2020 and was gazetted on 2 April 2020. The FS Act and the Financial Services (Exceptional Circumstances) Order, 2020 (Order) includes a structure that allows for stability of financial services operations, conducted in and from the BVI during extraordinary situations and permits relocation in the BVI or elsewhere and will modify certain regulatory obligations. The provisions of and measures introduced under the FS Act have been extended by another 3 months to 31 July 2020.

The Financing and Money Services (Amendment) Act, 2020 introduces a transaction levy of 7% on the gross amount of each money transmission out of the BVI. The proceeds of this newly introduced levy are to be applied 20% respectively to programs:

·         benefiting seniors;

·         for education (infrastructure, scholarships and other initiatives);

·         in the agricultural industry;

·         in the fishing industry; and

·         in support of a land bank and first time home owners

8. Implications for economic substance compliance and residency

On 18 March 2020, the British Virgin Islands’ International Tax Authority (ITA) issued a press release to the effect that it does not propose to make any changes to previously announced deadlines.  However, the ITA intends to adopt a reasonable and practical approach where legal entities are obliged to make adjustments to their operating practices in order to mitigate the threats from COVID-19 and the ITA will not seek to prejudice those entities which temporarily adjust their normal operating practices so as to mitigate the threats of the COVID-19 outbreak.

Any arrangements that are put in place would be temporary and persons are therefore urged to continue to make every effort to comply with all requirements (including filing deadlines) except where the practical and reasonable approach is necessary to manage the threat of the outbreak.

On 27 March 2020, the ITA issued a follow-up press release providing further particulars that should be borne in mind with respect to economic substance, repeating the above-stated reminder that any arrangements that are put in place would only be temporary:

·         Where possible, recourse should be had to the appointment of alternate directors in the BVI in order to meet substance requirements;

·         All directors do not have to attend Board meetings in the BVI – only as many as required to make the meeting quorate (given social distancing protocols, virtual meetings may be preferred);

·         Not all Board meetings need to be held in the BVI – only those related to core income generating activities;

·         Where it is still not possible to have a Board meeting in the BVI or to meet some other substance requirement due to restrictions (whether in the BVI or otherwise) due to the COVID-19 outbreak, then entities are urged to retain documentation to be able to support such claims for the applicable periods of time affected; and

·         Individual requests should be made to the ITA for any extension of time within which to  comply with Notices, along with any supporting evidence.

9. FATCA AND CRS enrolment

The ITA has extended the due date for FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standards) filings and enrolments to:

1.     FATCA – 31 July 2020 (enrolment deadline) and 31 August 2020 (filing deadline).

2.     CRS – 30 June 2020 (enrolment deadline) and 31 July 2020 (filing deadline).

The ITA has issued notifications to produce written policies and procedures pursuant to the Mutual Legal Assistance (Tax Matters) Act, 2003 (as amended). The ITA has also advised that it will take a pragmatic approach for those Virgin Islands Financial Institutions (VIFIs) that are facing any difficulties in providing their policies and procedures due to COVID-19. Such VIFIs are encouraged to contact the ITA at 1 (284) 468 – 4415 or by email to info@bviita.vg.