AEOI CRS - BVI > AUS

[Vax]

Hi guys,

My business partner and I (Bahrain resident) are planning to incorporate a BVI company and BVI corporate bank account. My business partner being an Australian citizen is concerned how the AEOI CRS policies will affect his Australian tax liability status. As far as I know BVI does not share info with AUS, but please correct me if I am wrong.

Do BVI banks report account statement summary or balances to Tax Revenue departments in Australia?

Are there any countries that would not be following the CRS policies with Australia? What are his tax minimisation options?

 

[Martin Everson]

BVI aint what it used to be. They recently changed their laws.

http://www.bvi.gov.vg/media-centre/...ation-address-eu-concerns-economic-substance?

Do BVI banks report account statement summary or balances to Tax Revenue departments in Australia?

Are there any countries that would not be following the CRS policies with Australia?

See the below for countries that have not set their first exchange date

https://www.oecd.org/tax/transparency/AEOI-commitments.pdf

What are his tax minimisation options?

For him not to be the company or account or ask him to speak to a good local tax advisor.

 

[Tax Cow]

BVI will indeed relay info to Australia. See here: Exchange relationships - Organisation for Economic Co-operation and Development (Select From/To to see details)

You can still use a BVI company, but in that case, Australian corporate tax is due proportionately on shares held. For example, if your Australian partner has 50% of shares, then 50% of income earned by BVI corporation is subject to Australian corporate tax.

To minimize tax, do not give your Australian partner any shares in BVI company. In addition to tax burden, this will result in more paperwork for compliance.

Instead of giving him 50% of shares, just sign a contract via a third party law firm that you agree to sell him 50% of shares for $1 dollar X number of years from now, or set another condition that better fits your exit strategy. Even if there were any countermeasures against such agreements for the tax purpose, it is easy to keep the document out of reach. As far as big brother is concerned, the Australian resident is just working for a foreign company, and as long as he properly declares and pays his personal income tax on salary earned from BVI corp, all will be fine.

 

[Vax]

BVI will indeed relay info to Australia. See here: Exchange relationships - Organisation for Economic Co-operation and Development (Select From/To to see details)

This is a really handy tool, thanks man!

Seems like there aren't many reliable jurisdictions that haven't agreed to participate in OECD AEOI.

 

[fshore]

You don't mention a few important things. Will there be any office for the BVI company? Where will it be tax resident?
If no other residency and this is a trading company then BVI might share info on the company to Australia. It will not share the name of the Australian shareholder/director, but Australia might get interested when they get a report that this BVI company is tax resident in Australia and send an information request to BVI to get to know who is the owners and directors of this company.

The new BVI substance requirements might help to make sure that the company is tax resident in BVI (but it will cost you), and depending on where the bank is it might agree to where it believes the company is resident.

 

[Vax]

Will there be any office for the BVI company? Where will it be tax resident?
If no other residency and this is a trading company then BVI might share info on the company to Australia. It will not share the name of the Australian shareholder/director, but Australia might get interested when they get a report that this BVI company is tax resident in Australia and send an information request to BVI to get to know who is the owners and directors of this company.

We will be using a registered agent in BVI with mail forwarding/virtual office. I assume since my Australian partner will not be a shareholder or director, my residency(Bahrain) would come into effect as per BVI company 's on record shareholder/director.

How would the BVI company be considered an Australian tax resident, if my partner is not on public records?

 

[Crest]

We will be using a registered agent in BVI with mail forwarding/virtual office. I assume since my Australian partner will not be a shareholder or director, my residency(Bahrain) would come into effect as per BVI company 's on record shareholder/director.

How would the BVI company be considered an Australian tax resident, if my partner is not on public records?

He means if the central management of the company is being undertaken in Aus, then that makes it classed as a Australian Tax Resident. But if you run the business from Bahrain then would be classes as Bahrain tax resident. Its more complicated than that, but its along those lines. But that kinda information is very hard to find out, so as long as you are on record as the director / shareholder, the info about the company will be sent to Bahrain.

 

[Martin Everson]

What is wrong with establishing the company in Bahrain, why offshore?

 

[Vax]

What is wrong with establishing the company in Bahrain, why offshore?

Using BVI would be considered a closer association to UK than Bahrain. We want to establish a corporate bank account and if possible a UK merchant account as well. I imagine a BVI company would probably be more favourably considered for these purposes.

 

[Martin Everson]

Using BVI would be considered a closer association to UK than Bahrain.

Not true.

I imagine a BVI company would probably be more favourably considered for these purposes.

No chance.

 

[Vax]

Not true.



No chance.

Thanks for your reply Martin, do you have any recommendations on what is the best pathway to obtaining a merchant account in the UK or Ireland?

If nothing else works, as a last resort option I am open to merchant account options in EU.

 

[Martin Everson]

Thanks for your reply Martin, do you have any recommendations on what is the best pathway to obtaining a merchant account in the UK or Ireland?

Open a merchant account for what entity?

You can search the forum as people have discussed merchant providers before.

 

[mrmrmanhuman]

BVI recently introduced a new requirement where Financial Institutions (investment entities relevant here) will need to have a person with a "permanant position" in the entity to be the Primary User of the reporting system (FATCA CRS). Currently if a structure uses corporate directors and have no employment, what is a possibe way to meet this requirement withouth having employees under the vehicle?

“Section 28(2)(c) of the MLA requires a VIFI to provide the name, address etc. of their principal point of contact for all purposes of compliance with the standard. This person is identified as the “Primary User” within the BVIFARs portal. It is expected that the primary user does not change and has a permanent position within the VIFI.”