Q：
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What is “Holding Business” under the BVI Economic Substance Act?
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A：
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Holding companies under the BVI Economic Substance Act means “pure equity holding companies” which the only business is holding interest in the securities of other companies. It does not produce goods or services itself, does not manufacture anything, or conduct any other business operation, only have the equity participation in other companies.
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Q：
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What should the company do if it is classified as carrying “Pure Holding Business”?
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A：
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The company will fall within scope of Economic Substance (“ES”) that need to fulfil the ES requirement if a pure equity holding company who cannot provides evidence of business and as a tax resident in another jurisdiction. To fulfil the ES requirement, the company needs to have sufficient establishment in BVI.
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Q：
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If the BVI company is a tax resident in other jurisdiction, it is still required to establish ES in BVI?
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A：
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No. BVI companies with oversea Tax ID are classified as “non-resident”, which fall out of scope of the ES requirements. However, they must provide sufficient evidence when filing the annual report to prove they oversea tax residency.
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Q：
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What is “Passive” pure equity holding and “reduced ES test”?
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A：
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Passive pure equity holding is a holding company without active management which is subject to “reduced ES test”. The reduced ES Test may be satisfied by retaining a registered agent and registered office in the BVI.
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FAQ
