No Policies & Procedures Could Cost You US$100K
Many tax authorities around the world have slowed down due to the pandemic but the British Virgin Islands International Tax Authority (ITA) is keeping busy. The ITA has started sending out notices to BVI Financial Institutions (FIs) requesting a copy of the BVI FI’s CRS policies and procedures. The penalty for failing to produce the document could be as much as US$100,000.
Legal P&P Requirement
BVI law requires that a BVI FI “establish, implement and maintain written policies and procedures”. This law also authorizes the ITA to request that an FI share the policies and procedures with the ITA.
The individual who has registered in the BVI AEOI portal as the Primary User will most likely be the person who receives the ITA notice. If this person is out of the office, I recommend that you ensure someone is monitoring the Primary User’s e-mail.
As a best practice, you should use a bucket e-mail rather than an individual’s e-mail when registering in a FATCA/CRS portal. This will ensure more than one person can readily access the e-mail account to promptly respond to any government requests.
The FI must respond to the notice within ten working days of the date of the ITA notice. The ITA permits the FI to send the policies and procedures via e-mail. It is also acceptable to send a hard copy of the document to the ITA’s Tortola office.
We should expect that more jurisdictions will be either requesting a copy of policies and procedures or scheduling examinations. I recommend you take the time to review your existing policies and procedures from the perspective of a tax authority to determine if there are gaps.
If you have not yet drafted policies and procedures, now is the time to factor the cost into your budget rather than pay a much higher penalty.