BVI Government Invites Specialist in FATCA

The British Virgin Islands jurisdiction has invited a specialist in the United States Foreign Accounts Tax Compliance Act (FATCA), which is now being discussed by the U.S. and BVI governments. The specialist will make special presentations to individuals affected by the US law. Financial Secretary Mr Neil Smith stated in his comments that specialist’s visit has the purpose of informing residents on their individual obligations under FATCA. He said: "What is important to note, is that FATCA gives the Internal Revenue Service (IRS) a new mechanism to collect information on US citizens that are not properly filing US income tax returns and reporting their bank accounts. The government really wants to ensure US citizens in the BVI are aware of their general US tax filing requirements."

 A few months ago, the BVI government commissioned professional services firm KPMG to carry out a study on FATCA, to highlight the persons who may be exempt from reporting under the law, and for better comprehension of obligations of individuals who are not exempt from compliance with the law.

Brian Obvi,
Offshore Analyst

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BVI Government Discusses Foreign Account Tax Compliance Act

The British Virgin Islands jurisdiction has started to discuss the Foreign Account Tax Compliance Act (FATCA) with the US Department of the Treasury. According to BVI Premier Orlando Smith, who told this to reporters on August 20, 2013, the territory is talking about the “intergovernmental agreement” with the US to comply with FATCA.

The Premier expressed the opinion that this course of action is the best for the BVI, and noted that its financial services industry complies with it.

The Foreign Account Tax Compliance Act provides that the Inland Revenue Service obtains information on accounts of US taxpayers, held abroad at foreign financial institutions. If foreign financial institutions fail to disclose information on their US clients, account ownership, and changes on the account balance, it will result in the requirement to withhold 30 percent tax on US source income.

In August, the Cayman Islands has concluded negotiations with the United States on agreements for automatic information exchange under the Foreign Account Tax Compliance Act, and Bermuda and the Bahamas have also expressed their intention to comply with FATCA.

Brian Obvi,
Offshore Analyst

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BVI Premier Confirms Support of G8 Tax Decisions

Last week, Premier and Minister of Finance of the British Virgin Islands Orlando Smith returned from London and gave his comments on G8 Tax Statement, confirming his support of the UK government’s global agenda on tax, transparency and trade, and his agreement to take an active part in the new initiative of multilateral automatic tax information exchange agreed upon by the UK, Germany, France, Spain and Italy. The BVI Premier also confirmed the plans to prepare national actions to meet the FATF standards on beneficial ownership, and to join the Multilateral Convention on Mutual Assistance on Tax Matters.

Orlando Smith noted in his comments: “In the debate about tax and transparency the fact that the BVI already has stronger financial regulation for trust and corporate service providers, as well as rules regarding beneficial ownership than many countries in the G8 itself, has not been adequately appreciated… For many years we have implemented the highest international standards on transparency, accountability and information exchange on tax matters, as set out by the OECD. The BVI will continue to be a constructive partner in evolving and setting the highest standards of regulation.”

Brian Obvi,
Offshore Analyst

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BVI Premier Takes Part in Pre-G8 Meetings with UK Prime Minister

Premier and Minister of Finance of the British Virgin Islands, Orlando Smith, has accepted the invitation to attend two meetings in London on June 15.

These meetings are hosted by UK Prime Minister David Cameron before the G8 meeting. During the first meeting, the BVI Premier is having an open consultation with the UK Prime Minister, together with leaders from all UK Overseas Territories and Crown Dependencies, while the second meeting is the discussion on the key issues of the G8 summit, including tax, trade and transparency, and involves a range of stakeholders, including representatives from Overseas Territories and Crown Dependencies.

The BVI Premier said in a letter sent to David Cameron that the jurisdiction will in principle commit to joining the Multilateral Convention on Mutual Assistance on Tax Matters - a multilateral agreement having the aim to promote international cooperation to combat tax evasion and aggressive tax avoidance.

Speaking about the meeting, the BVI Premier Dr Orlando Smith welcomed the invitation from David Cameron for consultation, and expressed Government’s support for the G8 agenda on tax, trade and transparency and trust that the G8 members will see the value of, and accept the need for, establishing global standards."

Brian Obvi,
Offshore Analyst

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BVI Signed TIEA with Canada

Last week, the British Virgin Islands government has signed TIEA with Canada. This tax information exchange agreement became the 24th for the BVI territory, allowing for the exchange of information by request on criminal and other tax matters in accordance with the procedures.

The TIEA was signed by the BVI Premier and Minister of finance, Dr Orlando Smith, and by the High Commissioner for Canada, Gordon Campbell from the Canadian side.

The Premier Dr Orlando Smith welcomed the agreement, and also, during his speech at the signing ceremony, which coincided with the Caribbean Council Reception, stated that the British Virgin Islands is unequivocally against tax evasion, fraud, money laundering and any forms of illegal activity, and supports UK strategy and UK Prime Minister’s agenda for the G8 summit. The Premier took the opportunity to reinforce the association the BVI has with the UK and welcome the spirit of cooperation between the countries.

Brian Obvi,
Offshore Analyst

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BVI and Macau Sign TIEAs with Japan

The Ministry of Finance of Japan had agreed on the new Tax Information Exchange Agreements with the British Virgin Islands and Macau, which will provide for the effective exchange of information in compliance with international standards, and for strengthening relations between the countries.

Under the Tax Information Exchange Agreements, the British Virgin Islands and Macau, and Japan from the other side, will share relevant information on request, when there is evidence of any kind of fiscal crime. 

The Japanese Ministry of Finance said that the government is determined to strengthen its tax information exchange network, to contribute to efforts to tackle international tax evasion and abuse.

The Japanese government intends to conclude the agreements with the BVI and Macau as soon as possible. They will be formally signed after the texts are finalized, and they will enter into force, once the countries have completed their domestic ratification procedures.

Brian Obvi,
Offshore Analyst

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Government Investigates Global Leak of Information on BVI Companies

The BVI government is investigating the ways how the US-based International Consortium of Investigative Journalists (ICIJ) received information on BVI companies, which is private. According to BVI Premier and Minister of Finance Dr Orlando Smith, this is an “illicit” leak of information used to attack the BVI financial services industry, which is actually fully compliant with the law and international guidelines.

The names of many BVI offshore company owners have been published by ICIJ, in collaboration with the Guardian newspaper and other international sources. This became the result of the leak of internal files of offshore incorporation agencies in the British Virgin Islands and some other tax havens – one of the biggest information leaks in history, which revealed many individuals and the details of their financial dealings through offshore accounts. 

This leak has already caused global reaction from governments and politicians. For example, Britain’s prime minister David Cameron is under pressure to act against the secretive offshore industry at June's G8 summit, as leaked evidence continued to show that politicians and tycoons from all over the world have used the BVI to hide their funds. Also, this week the European Commission announced an action plan to combat tax fraud and evasion, which was approved by Britain, France, Germany, Italy and Spain.

Orlando Smith said in his statement: "While the overwhelming majority of persons use international financial centres for legitimate purposes, there are those that will abuse the system. Where wrongdoing is discovered, appropriate enforcement action is and will be taken. We continually review our legislative regime to ensure transparency, co-operation and compliance with international standards."

Brian Obvi,
Offshore Analyst

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British Virgin Islands Joined GLISPA Organization

The British Virgin Islands has officially joined the Global Islands Partnership (GLISPA), with the aim to strengthen the government’s efforts to preserve the natural environment and accelerate the sustainable development of the BVI Territory.

At the GLISPA 2013 steering committee meeting, which took place in February in Washington, DC, and brought together officials from many agencies of the United Nations, as well as non-governmental organizations (NGOs) and governments, GLISPA’s strategic plan for 2013 was discussed, which includes strengthening the link between sustainable development and conservation under the theme Blue/Green Growth; and preparing for the United Nations Third International Conference on Small Island Developing States (SIDS) in 2014.

Deputy premier and minister for natural resources and labour of the British Virgin Islands, Dr Kedrick Pickering, made the announcement during the meeting, speaking on the benefits of GLISPA as a “United Nations recognised partnership and a platform for islands to cooperate on conserving their biodiversity and to promote sustainable development.”

Pickering held individual meetings with representatives of the United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP) and the UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), as well as with Hawaii and Seychelles officials.
Also, at a briefing organized by GLISPA, Pickering made a presentation on the Caribbean Challenge Initiative (CCI).

Brian Obvi,
Offshore Analyst

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BVI Premier Speaks on the Development of Financial Services Industry

The Premier and Minister for Finance of the British Virgin Islands Orlando Smith had discussed the future of the BVI as a financial centre with business leaders. He said that the BVI government has the aim to strengthen the position of the territory as a leading offshore financial centre that adheres to international standards, and to set the BVI apart from its competitors by developing innovative new offerings.

The Premier and Minister for Finance noted that the BVI, which once had unique position in the world of financial services, now has a community of competitors in this niche, as well as in tourism sector. He said that the territory must “rise to the challenges of keeping the twin pillars of economy not only sturdy but resilient.” By words of the Premier, the BVI should review its business models, and to improve or increase the products offered, because what once was an “extraordinary idea,” has now become “the new normal.”

Orlando Smith pointed to changing international standards on tax transparency and information exchange. He stressed that the BVI government must increase its efforts to inform the international community on all the steps taken by the jurisdiction to adopt leading international standards and improve co-operation with tax authorities of other countries. Also, he said that particularly close attention should be focused on the “correctly themed marketing of our tourism and financial services products, and currently efforts are fully underway to rebrand the BVI product."

To boost the ties of the BVI territory with emerging markets, particularly Asian, the BVI government plans to establish a representative office in Hong Kong.

Brian Obvi,
Offshore Analyst

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BVI Government Signed Contract with LGS and Associates

The Government of the British Virgin Islands signed a contract worth US$100,000 with a financial industry consultancy firm LGS and Associates, which is headed by the financial industry expert Mrs. Lorna Smith. 

The information about the signing of the contract in December 2012 was confirmed by the Financial Secretary Mr. Neil Smith and by Mrs. Smith herself, who stated that the contract is not a new assignment since she has been providing services to the BVI governments, including under the Virgin Islands Party administration. 

Mrs. Smith recently attended the OECD Global Forum on Transparency and Exchange of Information. She also took part in the negotiations concerning tax treaties between OECD countries and OECS countries, all of which have been put on the OECD ‘white list’. She also takes the post of Chairperson of the Financial Services Business Development Committee, whose task is to maintain the image of the British Virgin Islands as a top international finance centre, identifying new and emerging markets and recommending legislation for introduction and support of new and existing products and services.

Mrs. Smith assisted in the BVI passing phase I review process on global transparency and exchange of information for tax purposes, and, in her own words, continues to work to ensure that the BVI moves phase II of the review process.

Brian Obvi,
Offshore Analyst

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Opposition Comments on Budget Debates

Opposition Member and First District Representative Hon. Andrew A. Fahie noted in his comments on budget of the Territory that the Opposition did its best during the recent budget debates in the Fifth Sitting of the Second Session of the Second House of Assembly held on December 17 and 18, 2012. He said that the Opposition tried to save the British Virgin Islands from certain projects that are being done “in a highly questionable manner”, but he did not specify what kind of projects these were.

During the budget debates, Hon. Christopher criticized the airport extension project and especially the fact that full cost of it was not given.

According to Hon. Fahie, “The Budget process also clearly proved from the figures provided by the Ministry of Finance that the last Administration did not leave the country broke; however, although the empirical data clearly states such, the current Administration continues with the same old Marketing plan that the VIP left the country broke.”

Hon. Fahie concluded: “Overall we did our best and will continue to do our best to help this Administration to understand that it has to better prepare our people for what is ahead.”

Brian Obvi,
Offshore Analyst

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BVI Premier Announced New Budget Format and Fiscal Strategies

In his 2013 Budget Address to the BVI territory, the Premier and Minister of Finance Dr Orlando Smith named the increase of revenue from tourism, increased market share in the financial services industry, and renewed activity in the other components of the economy as the main factors for achieving positive economic growth in the British Virgin Islands.

The Premier explained that this budget is made over a rolling three-year period, for the first time in the history of the British Virgin Islands. This method will assist the government in the planning for a longer term, and allow for the better management. The new budget format is built upon a new chart of accounts that is based on the International Monetary Fund’s government finance statistics (GFS) format. 

The fundamental principles of the government’s fiscal strategy include: increasing the recurrent budget surplus over the medium term through the enhancement of the revenue stream, a reduction in recurrent revenue growth, reducing the fiscal deficit by 2015, meeting the borrowing limit ratios stated in the protocols for effective financial management, and enhancing the financial management structure and practices within the government.

Brian Obvi,
Offshore Analyst

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BVI Adopt New Laws on Aicraft Registration

New laws to support the expansion of the aircraft registry of the British Virgin Islands entered into force, enabling locally-registered operators to secure aircraft financing. New pieces of the BVI legislation, named the Mortgaging of Aircraft and Aircraft Engines Act, 2011, and the Mortgaging of Aircraft and Aircraft Engines Regulations, 2012, allow aircraft operators to register their ownership in the jurisdictions under three separate registries – for aircraft, their engines, and their mortgages. This will give to aircraft operators the opportunity to receive financing from lending institutions, which require that legal ownership should be demonstrated before providing financing.

The British Virgin Islands has been known as tax-efficient jurisdiction for aircraft holding companies, and in the last year the government launched the development of the local Aircraft Register. The BVI government expects that, with the new legislation, the jurisdiction will be able to use its position as a holding company domicile to encourage international operators to register their aircraft and engines in the BVI. 

According to Harney’s law firm, the new legislation, and especially its development providing for the filing of priority notices for credit institutions “paves the way for new business opportunities which complement and support the British Virgin Islands’ position as the premier offshore corporate domicile with over 850,000 companies incorporated to date.”

Brian Obvi,
Offshore Analyst

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Next Year Budget To Be Presented On November 15

Next week, BVI Premier and Minister of Finance Hon. Dr. D. Orlando Smith will present the Budget of the Territory for 2013. It will be the second Budget of this Government since taking up office a year ago.

The 2013 Budget presentation is the first to be made since signing of the Protocols for Effective Financial Management with Britain’s Government, which mandate that the BVI jurisdiction builds its reserve funds – the initiative much criticized by the Opposition and named too restrictive for the Government. Under these protocols, which were signed by Premier Smith, the amendments to the Public Finance Management Act were passed by the House of Assembly, but they are still waiting Governor’s approval. 

According to the Public Finance Management (Amendment) Act, 2012, the Budget must include Medium Term Fiscal Plan (MTFP); a Budget Policy Statement; and a Multi-year Budget Document.

Brian Obvi,
Offshore Analyst

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New UK Minister’s First Official Visit to the BVI

Mark Simmonds, the UK Minister for the Overseas Territories, who was appointed at his post in September 2012, has chosen the British Virgin Islands as the place for his first visit. During his visit on October 22-24, he had joint press conference with BVI Premier and Minister for Finance, Hon. Dr. D. Orlando Smith and Governor Boyd McCleary, where he talked about some aspects of the UK Government’s views about the Virgin Islands.

Mr. Mark Simmonds stated that during meetings with the BVI Premier and his colleagues he discussed such matters as good governance, financial management and economic planning in keeping with the White Paper issued by the British Government. He said: "I have had some extremely good discussions with the Premier and his Ministers and others in my short time here in the BVI. I have been impressed by the progress that is being made in responsible and prudent financial management in the fact that the Financial Management Act has been passed and the procurement processes are now in tune with international standards and that is a sign of a very progressive and determined Government."

Mr. Simmonds also had a private conversation with the Opposition Leader Hon. Ralph T. O´Neal. The Opposition continues to talk about the restrictive nature of the protocols, and about the need for their renegotiation. However, Mr. Simmonds considers the protocols are right, and should not be renegotiated.

After visiting the British Virgin Islands, the UK Minister departed for Anguilla.

Brian Obvi,
Offshore Analyst

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Premier Explains Situation with Protocols to the Public Finance Act

The Opposition of the British Virgin Islands expressed its concerns about several issues, including the possible breach of the Protocols for Effective Financial Management by the administration, and the penalties that might follow from the United Kingdom (UK) Government. Hon. Andrew Fahie is going to ask over 30 questions at the sitting of the House of Assembly on September 3. 

The Protocols were signed in April 2012 by Premier and Minister for Finance, Hon. Dr. Orlando Smith on behalf of Government and Mr. Henry Bellingham, the United Kingdom Minister for the Overseas Territories. They called for the implementation and entering into force of the enhanced Public Finance Act by August 2012. 

Premier Hon. Orlando Smith said that the BVI Government has already reviewed the new provisions to the enhanced Public Finance Act, and after they are tabled at the next sitting of the House of Assembly, they will be debated and passed at the next sitting of the House.

Also, Premier said that this set of protocols to which the BVI Government has agreed will provide for effective management of finances, to be fully transparent and accountable. He stated that one of the significant things with the protocols is the question of liquid assets, as the British Virgin Islands jurisdiction from time to time has been in breach of the liquid assets under previous agreements. However, he assured: "I will say based on what is contained now in the protocols, we are in breach, but we also have an agreement that by 2015 we will meet all the requirements of the protocols."

Brian Obvi,
Offshore Analyst

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Premier Writes Message for BVI Art and Culture Show in London

In his written message to the recently held BVI Art and Culture Show and Territory Day Reception in London that was read by Director of the BVI London Office, BVI Premier Hon. Dr. Orlando Smith stated: “My Government is fully aware of our obligations as a Territory and we stand ready to meet our responsibilities under the new partnership.”

He said that the BVI government welcomed the publication of White Paper of the Overseas Territories and is committed to developing further partnership with the United Kingdom. 

The keynote speaker at the event, Deputy Speaker of the House of Commons Mr. Lidsay Hoyle, MP, said: "It is time for a grown up relationship between the United Kingdom and British Virgin Islands. The Overseas Territories should determine their own future and not have it imposed by Britain."

Brian Obvi,
Offshore Analyst

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International Tax Authority Set Up in BVI to Deal with TIEAs

The International Tax Authority (ITA) has been established in the Ministry of Finance of the British Virgin Islands. The new unit, designated by Financial Secretary Neil Smith, will ensure the effective exchange of tax information under Tax Information Exchange Agreements signed between the BVI and a number of countries.

Responsibilities of the International Tax Authority include dealing with practical aspects of TIEA requests, negotiating TIEA agreements with potential partners, and developing the framework within the BVI territory for the effective exchange if information. 

ITA will perform the functions section 4(1) of the Mutual Legal Assistance (Tax Matters) Act, 2003 (MLA), which is said to be the base for the BVI international co-operation regime in tax matters. The MLA gives effect to the terms of the Agreements between the Government of the British Virgin Islands and the Governments of the USA and of the United Kingdom for the exchange of information in relation to tax matters, which were signed in 2002. According to the Ministry of Finance, the MLA will apply to any similar agreement that the British Virgin Islands enters into.

Brian Obvi,
Offshore Analyst

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Annual OTCC Meeting to be Held in London

During the Overseas Territories Consultative Council (OTCC) meeting, which is held annually in London since 1999, and this year will be held on 23-24 November, the UK government will discuss new strategy for its Overseas Territories.

The meeting will be hosted by Henry Bellingham, Foreign Office Minister for the Overseas Territories. It will be visited by premiers, chief ministers and elected representatives from UK Overseas Territories. There will also be ministers from the Departments for International Development; Transport; Environment; Energy and Climate Change; the Treasury; Home Office; Ministry of Defence; Culture, Media and Sport; and Business, Innovation and Skills.

Speaking on the event, Bellingham said: “I look forward to discussing with Territory leaders their ideas for the development of our partnership which will help us develop our thinking for the White Paper on the Overseas Territories that we intend to publish next year."

During the OTCC meeting, the leaders and elected representatives will attend a reception hosted by the Commonwealth Parliamentary Association, and will have bilateral meetings with Bellingham. From the British Virgin Islands, the OTCC meeting will be attended by the newly elected Premier Dr Orlando Smith.

Brian Obvi,
Offshore Analyst

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BVI General Elections Won by Opposition

This week, it was announced by election officials that the main opposition National Democratic Party (NDP) had won the November 7 general elections in the British Virgin Islands territory. NDP received 9 of 13 parliamentary seats, while the party of outgoing Premier Ralph O'Neal won 4 seats, down from 11 in the previous Parliament.

The NDP, led by Dr. Orlando Smith who held the premier office in 2003-2007, promised to safeguard the sectors of financial services and tourism, which are especially important for country's economy.

Voter turnout was reported to about 75 percent of the 12,600 voters.

Former Premier and the leader of Virgin Islands Party (VIP), in a public speech has congratulated the newly elected Premier, Hon. Dr. Orlando Smith. He said that this is not the first time that he has been in the opposition, and that he looks forward to working with the new National Democratic Party Government in the new House of Assembly.

Brian Obvi,
Offshore Analyst

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