November 23, 2014
The British Virgin Islands (the “BVI”) had at the end of 2012 enacted record-keeping rules for companies already registered and new, and limited partnerships to comply with OECD requirements. These rules were revised in September 2014 and the key requirements are:-
(1) Records must be maintained for at least five (5) years from the commencement or termination of a transaction.
(2) These records and underlying documentation can be kept in the BVI or elsewhere.
(3) In cases where this documentation is kept outside the BVI the company concerned must inform in writing its BVI registered agent of the physical address where these records are kept and of any change in their location.
It should be noted that companies must still meet their existing obligation to keep records that:-
(1) Are sufficient to show and explain the company’s transactions.
(2) Enable the financial position of the company to be determined with reasonable accuracy.
The recently introduced rules state that these records must include:-
(1) sums of money received and expended;
(2) sales and purchases of goods; and
(3) assets and liabilities.
The term “underlying documentation” is defined as including “accounts” but does not mean that companies have an obligation to produce and maintain financial statements. The term means that they are required to keep “accounting records”.
It should also be noted that companies and partnerships that contravene the record-keeping obligation are liable to penalties. The new rules do not for the time being impose penalties for non-compliance. However, companies are required to comply with requests for information from the BVI tax authority which is responsible for dealing with requests from overseas tax authorities pursuant to the relevant tax information exchange agreements to which the BVI is a party.