BVI consults on country-by-country reporting

The British Virgin Islands (BVI) has announced the launch of a two-week long private sector consultation on the impact of country-by-country reporting (CBCR) in response to the OECD’s Base Erosion and Profit Shifting (BEPS) project and other initiatives designed to improve tax transparency

CBCR is a key element of the BEPS initiative and, if implemented, would require multinationals incorporated in the BVI with annual group revenues of €750m (£633m) or more to file a detailed return annually with the territory’s tax authorities. In addition, these reports would be automatically shared between countries signed up to the BEPS initiative to provide greater transparency on the tax affairs of companies operating across borders.

The BVI government, which along with other British overseas territories has come under increasing international pressure to sign up to CBCR, said the consultation will analyse the impact of this reporting approach, and assess how the territory’s private sector defines ‘economic substance’ which is critical to determining where activity is located.

As part of the consultation, the BVI government is asking for views on the issue of economic substance which aims to align the amount of organisational and economic activity undertaken by a multinational corporation with the taxable profits declared in each jurisdiction in which it operates.

Lorna Smith, interim director of BVI finance, which represents the financial services industry, said: ‘We recognise the importance of international collaboration between jurisdictions to ensure that the global tax system remains robust and effective and we welcome the OECD’s work in this area. 

‘We pride ourselves on our track record of engaging stakeholders in the private sector and to ensuring that our regulatory framework is fully supportive their needs. We look forward to receiving responses to our consultation and to further progressing our work on this important international initiative.’

The consultation closes on 16 September. Details are here.

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