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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Deloitte Announced Merger of BVI, USVI and Bermuda Offices

In the end of August, international accounting and financial consulting firm Deloitte announced the merger of its BVI, USVI, and Bermuda practices. It is said to bring enhanced services to clients and greater access to Deloitte professionals who provide insights and solutions to complex business challenges.

The company also informed that the practices will continue to operate as Deloitte & Touche Services Ltd, from the current offices in the British Virgin Islands and US Virgin Islands, providing tax, consulting, financial advisory and audit services. The company does not plan to close offices, and each of them will have local leadership. 

The merger combination, effective from August 26, coincides with the retirement of BVI/USVI office managing partner Mark Chapman, who will continue as a consultant to the company through the end of October. Mark Chapman joined Deloitte BVI in 1995, and focused on offshore enterprises in the financial services sector. Now the British Virgin Islands and US Virgin Islands offices will be operated by Carlene Romney, who is specialist in financial services audits, and Richard White, an experienced professional with over 13 years of working in practice and industry as a chartered accountant.

Speaking about the merger of practices, Carlene Romney stated that Deloitte’s clients, communities and professionals will benefit from it, as the company will be able “to deliver additional services, especially in areas such as tax, restructuring, and risk management.”

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 FSC Published Quarterly Statistics for Period Ended March 2013

The British Financial Services Commission has published the regular volume of its Quarterly Statistical Bulletin, providing statistics and analysis of financial services industry activities in the jurisdiction in the first quarter of the year, ended March 31, 2013. According to the information of the Registry of Corporate Affairs, 16,666 new companies were incorporated in this period, as compared to 14,783 in the fourth quarter of 2012, and 17,865 in the first quarter of 2012. Cumulative number of active companies incorporated in the BVI at the end of Q1 2013 was 482,747. Also, there were 565 Limited Partnerships and 1,061 Private Trust Companies registered in BVI by the end of the reported period.

Banking and Fiduciary Services sector shows the following figures for commercial banks in the first quarter of 2013 (in US$ thousands): total assets made $2,436,445, deposits made $1,809,321, total shareholders’ equity was $416,240, operating income was $24,982, and net income was $13,673. 

In Investment business, 10 new Investment Business Licences were granted in the first quarter of the year (6 in Q4 2012, and 16 in Q1 2012), and 39 Mutual Funds were licensed (27 in Q4 2012 and 32 in Q1 2012). Cumulative number of Investment Business Licences as of 31 March 2013 was 530, and cumulative number of Mutual Funds was 2303.

According to Insolvency Services statistics, total number of Insolvency Practitioners in Q1 2013 was 23, the same as in the fourth and the first quarters of 2012. In the Insurance business sector, two insurance licences (1 captive and 1 domestic) were granted in the reported period, making the cumulative number of licences in this industry to achieve 229. 

As concerns Legal and Enforcement and International Cooperation statistics, there were totally 32 Enforcement Actions during the first three months of the year, including Advisory Warnings, Directives, Administrative Penalties, etc. Other information, including statistics on Ongoing Supervision and Onsite Inspections, can be found on the website of BVI FSC.

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 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 Other Financial Centres Sign Up for UK Strategy to Enhance Tax Transparency

UK Chancellor of the Exchequer George Osborne welcomed the news that British Overseas Territories with significant financial industry sector, among them the Cayman Islands, the British Virgin Islands, Anguilla, Bermuda, Montserrat and the Turks and Caicos Islands, signed up for the UK government’s strategy on global tax transparency. This strategy will allow these financial centres to automatically share information bilaterally with the UK, and multilaterally with the G5 countries - the UK, France, Germany, Italy and Spain. 

Under the agreement, much greater levels of information about bank accounts, including those held by trusts, will be exchanged, marking a turning point in the fight against tax evasion and illicit finance. The parties involved in the agreement will know the names, addresses, dates of birth, account numbers, account balances and details of payments made into those accounts. This will increase the level of international transparency and will make it much harder for people to escape paying taxes.

This year, Britain’s Prime Minister David Cameron identified tax transparency as a key priority for the summit of the G8. The jurisdictions, including BVI, have also committed to take action to ensure they are at the forefront of transparency on BVI company ownership. Osborne has invited other countries to join the initiative.

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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BVI Delegation Visited Business Conferences in Dubai

In March, the British Virgin Islands delegation visited the two conferences in Dubai, with the purpose to discuss potential co-operation in the sphere of financial services, and attract funds and business to the BVI.

The Hedge Funds World Conference at the Jumeirah Beach Hotel in Dubai and the Society of Trust and Estate Practioners' "Opportunities for the Flow of New Wealth Conference" were organized to discuss business and investment possibilities in Dubai, particularly from tax-free Dubai International Financial Center.

Elise Donovan, the Executive Director of the BVI International Finance Center, commented on the events: “We were given a very warm welcome on our return to the United Arab Emirates and it is clear that many investors from across the region recognize the advantages of using BVI structures and services for conducting international business.”

She also said that the British Virgin Islands is an “attractive option to investors from the Gulf States looking to acquire BVI company structures for a multiplicity of investing and other cross-border transactions. BVI’s structures are easy to use, flexible, widely accepted and cost-competitive compared to other products being offered in the region."

Brian Obvi,
Offshore Analyst

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BVI Named a Major Financial Centre by The Economist

In a special report by The Economist, a well known weekly news magazine publishing reports on politics, economics, business and finance, BVI has been recognized as a major financial centre playing a strong role in the global economy. It is stated in the report that offshore financial centres have recently been under attack but have been resilient to it, and the future of respected international finance centres like the British Virgin Islands and their staying in business is guaranteed.

The report, named “Storm survivors”, also acknowledges the importance of Asia to the BVI jurisdiction, as the BVI companies are used for initial public offerings and international investments. Among the reasons why investors are using the BVI for international arbitrage, there are highlighted the ease of raising funds, cheaper access to capital markets, speed of setting up a company (or investment vehicle) and access to reliable courts. 

The executive director of the BVI International Finance Centre Elise Donovan commented on the report, saying that “The Economist has highlighted some positive attributes about the BVI. It has shown us in a true light as a stable, well regulated and neutral jurisdiction which makes a significant contribution to the liquidity of the global economy.”

She also said some words on the role of Asian market for the BVI: “Asia is of the utmost importance to us. In less than 10 years, China will be the largest economy in the world. We have built a strong relationship with China and we must continue to build on those foundations and ensure the BVI remains an attractive proposition for Asian businesses.”

Brian Obvi,
Offshore Analyst

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Financial Services Day Held by BVI International Finance Centre

Last week, the BVI International Finance Centre hosted Financial Services Day, as part of the BVI Senior Students Career Expo which took place on February 11-14 at the Multipurpose Sports Complex. Financial Services Day has the aim to educate secondary school students on the importance of the BVI financial services industry and its many career opportunities.

The Exhibitors of the Financial Services Day included key industry players – the Financial Services Commission, BVI Bank Association, BVI Association of Professional Accountants, BVI Bar Association, Virgin Islands Shipping Registry, Financial Investigation Agency, BVI Airports Authority, Restructuring and Insolvency Specialists Association, Association of Registered Agents, the Society of Trust and Estate Practitioners, and insurance companies.

IFC Executive Director Ms. Elise Donovan in her introductory remarks spoke about the contribution of the financial industry to the economy of the Territory, stating that “more than 60 percent of the revenues that goes into the Government’s Treasury come from financial services.”She encouraged students to consider careers in the financial services sector, which is so important to the British Virgin Islands.

The BVI IFC hosted the BVI Senior Students Career Expo beginning from 2007, in previous years this was held only for students of the Elmore Stoutt High School (ESHS).

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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Harneys Issued Second Edition of “British Virgin Islands Commercial Law”

In the last weeks of 2012, the international offshore law firm Harney Westwood & Riegels announced the publication of the 2nd edition of practitioner’s textbook ‘British Virgin Islands Commercial Law’. Since it was first published in February 2012, it remained the first and only textbook focusing solely on British Virgin Islands law and practice, comprising Harney’s expertise as the oldest and largest law firm in this offshore jurisdiction.

The publication is an authoritative source of information and advice for lawyers and other professionals who work with corporate structures and transactions, providing a deep analytical view of BVI legal background, related to business companies, partnerships, credit and security, investment funds, insolvency, dispute resolution, taxation and trust legislation. 

There are some changes in the law of the British Virgin Islands that occurred since the 1st textbook was edited, including the passing of the BVI Business Companies (Amendment) Act 2012 was passed and the accompanying BVI Business Companies Regulations 2012.

Brian Obvi,
Offshore Analyst

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BVI Corporate Law Updated by Amendments and Regulations

The British Virgin Islands Financial Services Commission announced that the BVI Business Companies (Amendment) Act, 2012 and associated BVI Business Companies Regulations 2012 came into force on 15 October 2012, amending the original BVI Business Companies Act, 2004. Both the Act and the Regulations actually are the first significant update to the corporate law regime of the British Virgin Islands since 2006, and introduce a number of measures aimed at streamlining, clarifying and improving the administration of BVI Business Companies.

The BVI Business Companies (Amendment) Act, 2012 includes 85 new and amended provisions which clarify certain issues within the Act, and codify some existing practices. Some of the key changes that have been made affect such important issues as company names, share class conversion and bearer shares, Notice of Amendment, the Registrar of Companies, registered agents and registration procedure, voluntary liquidation and dissolution, fees, and security interests of the companies. All the changes are beneficial to the BVI regime and aimed to increase its attractiveness as one of the leading offshore jurisdictions worldwide. 

BVI Business Companies Regulations, 2012 have been developed to complement the implementation of some of the provisions of the Act. The Regulations have a total of 29 new provisions and three new Schedules.

The BVI Business Companies (Amendment) Act, 2012 and BVI Business Companies Regulations 2012 can be found on Commission’s website at www.bvifsc.vg.

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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BVI FSC Issues Public Statements on Insurance Companies

The British Virgin Islands Financial Services Commission has issued public statements concerning the following companies: Hove Insurance Company Limited, Settlement Casualty Corporation, and Vessia Insurance Company Limited. By the public statements, the general public becomes aware that these companies are no longer licensed or regulated by the Commission, and are subject to enforcement action that remains outstanding. All the three companies were formerly licensed by the BVI FSC to conduct insurance business from within the territory.

In October, 2010, the BVI FSC imposed an administrative penalty on Hove Insurance Company Limited, in the amount of US$4,000.00 for failing to timely submit audited financial statements. The company did not pay it, and as a result of the non-payment of its fees, on 1 May, 2010 it was struck off the BVI company register maintained at the Registry of Corporate Affair. It is no longer licensed and regulated by the Commission, the license having expired on 31 December, 2009.

In November, 2010, the Commission imposed an administrative penalty on Settlement Casualty Corp, in the amount of US$5,000.00 for failing to submit audited financial statements to the FSC within the approved or prescribed period. This administrative penalty was not paid, and remains outstanding. The company was struck off the BVI company register as a result of the non-payment of its fees. The license of the company has expired on 31 December, 2009.

In December 2009, the FSC imposed an administrative penalty on Vessia Insurance Company Limited in the amount of US$4,000.00, for failing to submit audited financial statements to the FSC within the approved or prescribed period. This administrative penalty was not paid, and remains outstanding. In June, 2011 the Commission imposed an administrative penalty on the company in the amount of US$6,000.00. The company was struck off the register on 1 May, 2010, as a result of the non-payment of its fees. The company is no longer licensed and regulated by the FSC, the license having expired on 31 December, 2009.

Brian Obvi,
Offshore Analyst

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Commission Enhances Security Features of Certificates

The British Virgin Islands Financial Services Commission has announced the introduction of new, additionally secured certificates. All certificates issued by the BVI FSC will receive enhanced security features, with the purpose to minimise incidents of counterfeiting and to preserve authenticity of the official documents.

CEO and Managing Director of the Commission, Robert Mathavious said in his comments that the introduction of the new certificates was a timely initiative that will protect both the jurisdiction and the customers from forgery and illegal reproduction of official documents for illicit purposes.

The new certificates of the Commission will have blue or blue/green graded background, and will bear the logo of the Commission and the words ““Territory of the Virgin Islands.” There will be also other enhanced security features including anti-copy markings on the back of each certificate.

Brian Obvi,
Offshore Analyst

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Harneys Launches Textbook on BVI Law

On February 15, Harneys law firm launched the publication of 'British Virgin Islands Commercial Law', which is the first textbook that focuses exclusively on BVI law and practice. This event was attended by the representatives of business and legal community.

Governor McCleary and Premier and Minister for Finance Dr. D. Orlando Smith congratulated Harneys on the book's publication and talked on the significance of such a publication about the British Virgin Islands which depends on financial services industry. By words of Premier Smith, Harneys for several decades has been a committed company in the British Virgin Islands.

The textbook is written by Harneys lawyers and published by leading legal publisher, Sweet and Maxwell. It includes chapters on Company Law, Credit and Security, Law of Property, Financial Services Law, Investment Funds, Insolvency Law, Dispute Resolution and Trusts.

In January, the firm celebrated the publication of the new textbook in Hong Kong where it held legal seminar and interactive session on recent legal developments in the BVI jurisdiction.

Brian Obvi,
Offshore Analyst

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UK Launches Consultations with Overseas Territories

Henry Bellingham, Minister of State at Britain's Foreign and Commonwealth Office, who is in charge of overseas territories, has formally launched a consultation process in respect of the new White Paper that will be produced and published in 2012 on the UK's relationship with its Overseas Territories, including British Virgin Islands. In a speech during his visit to Bermuda, Mr. Bellingham said that the UK government's strategy towards the Overseas Territories focuses on the following areas: strengthening the engagement and interaction between the UK and the Territories, working with territories to strengthen good governance arrangements, public financial management and economic planning where this is necessary; and improving the quality and range of support available to the territories.

Bellingham said that the period of consultation is “for the purpose of identifying what we can do to improve the functioning of the relationship between the UK and each Overseas Territory in the three broad areas defined.”

All the leaders of the Overseas Territories will be able to discuss the White Paper when they meet on the annual Overseas Territories Consultative Council, which will take place in London on November 23-24.

Brian Obvi,
Offshore Analyst

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