The requirement for offshore-based companies to have sufficient "substance" to comply with tax and other rules has become a critical one.
Vistra, the global trust, fund administration and corporate services provider, has launched a service to help clients with British Virgin Islands-based firms be sure their businesses have sufficient actual substance. The service plays to how offshore centres are under pressure to shut down structures that are deemed to be empty shells.
The new offering is called Economic Substance Services and Solutions, starting with the British Virgin Islands (BVI) Economic Substance Classification Questionnaire. Vistra said the service has been created by its own legal team and has developed a BVI Economic Substance Classification Questionnaire.
The firm plans to add other jurisdictions to this service, including the Cayman Islands.
“It is now mandatory for all BVI entities to comply with substance requirements and demonstrate good corporate governance,” Simon Filmer, global lead, company formation, Vistra, said.
Late last year, the BVI introduced the Economic Substance (Companies and Limited Partnership) Act 2018 in response to the European Union’s Economic Substance requirements, which address alleged concerns of entities generating too much profit and too little substance in low or zero-rate tax jurisdictions. As a result, all BVI entities need to understand their obligations, be compliant and, where applicable, demonstrate and report economic substance.
For a view about issues around substance, see here.