As a result of the 2012 amendments to the Mutual Legal Assistance (Tax Matters) Act, 2003 and the Partnership Act, 1996 (the “2012 Amendments”), all companies and limited partnerships registered in the BVI are now required to maintain “records and underlying documentation” and to keep such records and underlying documentation for a minimum of five (5) years.
The original records and underlying documentation can be kept at any location(s) but if they are not kept at the office of the company’s Registered Agent the company must provide a written confirmation to its Registered Agent of the physical address of the place or places at which the records and underlying documentation are kept. Prior to the 2012 Amendments, BVI companies have always been required pursuant to section 98 of the BVI Business Companies Act, 2004, as amended (the “BC Act”), to keep records that:
(a) are sufficient to show and explain their transactions; and
(b) which would, at any time, enable their financial position to be determined with reasonable accuracy,
Section 98 of the BC Act remains applicable to all BVI companies.
The 2012 Amendments provided little guidance regarding what comprises “records and underlying documentation”, although accounts of a company or limited partnership are expressly included. The Mutual Legal Assistance (Tax Matters) Act, 2003 did however state that “records and underlying documentation” must be in a form sufficient to show and explain the company’s transactions and they must at any time, enable the financial position of the company to be determined with reasonable certainty.
As such, further amendments were needed and in September 2014, amendments to the Mutual Legal Assistance (Tax Matters) Act, 2003 and the Partnership Act, 1996 were passed (the “2014 Amendments”) which provided a definition for “records and underlying documentation”. It is defined to include accounts in relation to:
(i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
(ii) all sales and purchases of goods by the company; and
(iii) the assets and liabilities of the company.
The 2014 Amendments will now hopefully settle the uncertainty as to what is meant by “records and underlying documentation” and assist with better industry practice in the BVI and transparency.
On 16th September, 2014 the 2014 Amendments were published in the Official Gazette and will come into force immediately.