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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Global Forum Released Reports on Information Exchange in BVI and Other 12 Jurisdictions

According to the Tax-news, Global Forum on Transparency and Exchange of Information for Tax Purposes issued peer review reports assessing tax systems of thirteen countries, including BVI, for information exchange. These reviews are to become part of the ratings of 50 jurisdictions, in compliance with G20 and Global Forum efforts to strengthen tax cooperation.

All the reports assess the commitment of the jurisdictions to the international requirements for tax information exchange. Of these 13 reports, 11 are “Phase 2” reports covering the exchange of information in Austria, Bermuda, Brazil, British Virgin Islands, India, Luxembourg, Malta, Monaco, Qatar, San Marino and The Bahamas. Two are “Phase 1” reports, concerning Israel and Lithuania, looking at the legal and regulatory framework for transparency and exchange of information. 

The Chair of the Global Forum Kosie Louw, of the South African Revenue Service, welcomed the reports noting: "The Global Forum is applying pressure on all jurisdictions to implement the standard and co-operate effectively in tax information exchange. The publication of the ratings later this year will be a crucial moment for all those committed to fighting cross-border tax evasion."

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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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 signed TIEA with Czech Republic

On June 13, the British Virgin Islands has signed a tax information exchange agreement (TIEA) with the Czech Republic. The Agreement was signed in Prague, the BVI was represented by the BVI's Deputy Premier and Minister of Health and Social Development Dancia Penn, and the Czech Republic was represented by First Deputy Minister Ladislav Mincic.

The parties also agreed to a Protocol setting out that no prejudicial or restrictive measures will be applied to residents or nationals based on harmful tax practices.

The statement issued jointly by the governments of the British Virgin Islands and the Czech Republic, included the following: “The Czech Republic and BVI have long been active in international efforts in the fight against financial crimes and each share a common commitment to develop and comply with international standards on money laundering, terrorist financing and financial regulation. The Czech Republic recognises the BVI government's reputation as a constructive and co-operative member of the international community with a globally integrated and responsible finance centre.”

The TIEA signed by the BVI and the Czech Republic provides for the exchange of information by request on civil and criminal tax matters, in accordance with the OECD standards. This is already the twenty first Tax Information Exchange Agreement signed by the British Virgin Islands, the previous one was concluded with the Republic of India.

Brian Obvi,
Offshore Analyst

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OECS and WTO Discuss Tariff Liberalization

The Organization of Eastern Caribbean States (OECS) has said during the meeting with World Trade Organization (WTO) that securing flexibility in negotiations on tariff liberalization will enable governments to avoid cuts to border taxes.

The topics discussed during the meeting of trade officials included market access for agricultural and industrial goods, trade facilitation, fisheries subsidies, intellectual property rights and services, as well as all the matters which have proved controversial.

The OECS Technical Mission in Geneva reported significant progress for the OECS in most spheres of the negotiations with World Trade Organization (WTO). By words of the head of the OECS Technical Mission, Ricardo James, in the area of tariff liberalization “a special concession has been granted to Small Vulnerable Economies (SVEs), such as the OECS member states, that will significantly modulate the depth of tariff cuts.”

The OECS recognized that more needs are to be done, in particular, in such areas as Intellectual Property Rights, Dispute Settlement and the Harmonized Liberalization of Services sectors within the context of the establishment of the OECS Economic Union. According to James, each country will have to provide an offer regarding the additional services sectors they would want to liberalize and by how much.

The British Virgin Islands is an associate member of the OECS.

Brian Obvi,
Offshore Analyst

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BVI Signed Twentieth TIEA

The Government of the British Virgin Islands has signed Tax Information Exchange Agreement (TIEA) with the Republic of India. The Agreement was signed by Deputy Premier and Minister of Health and Social Development Honourable Dancia Penn OBE QC and the High Commissioner of India to the UK His Excellency, Nalin Surie.

In a Joint Declaration signed with the TIEA both parties state that their countries are active, constructive and cooperative members of the international community with globally integrated and responsible finance centres. It is also stated that India and BVI have long been active in international efforts in the fight against financial crimes, and each of them shares a common commitment to develop and comply with international standards on money laundering, terrorist financing and financial regulation.

Honourable Dancia Penn welcomed this agreement, saying that India is a key market for financial services business of the British Virgin Islands. Also, she said that the BVI is fully committed to pursuing further discussions with the Government of the Republic of India, and the jurisdiction will look to build on the important trading and cultural ties that already exist between the countries.

The Agreement with India is the 20th TIEA of the British Virgin Islands. To answer the OECD guidelines and the new international tax standard, jurisdictions are required to sign at least 12 TIEAs.

Brian Obvi,
Offshore Analyst

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BVI Signed Another TIEA with Portugal

Last week, another Tax Agreement was signed by the British Virgin Islands Government – this time with Portugal. So, the total number of Tax Information Exchange Agreements signed by the BVI was brought to 19.

The agreement was signed at the BVI's London Office by Deputy Premier Dancia Penn and Portugal's Secretary for Tax Affairs, Professor Sérgio Trigo Tavares Vasques.

In a joint declaration, BVI and Portugal stated that the agreement represents a milestone in relations between both countries. It is stated in the document that “Portugal and BVI have long been active in international efforts in the fight against financial crimes and each share a common commitment to develop and comply with international standards on money laundering, terrorist financing and financial regulation. The Portuguese Republic recognises the BVI Government's reputation as a constructive and co-operative member of the international community with a globally integrated and responsible finance centre.”

Brian Obvi,
Offshore Analyst

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BVI Signed TIEA with Germany

On Tuesday, October 5, the BVI government signed Tax Information Exchange Agreement with Germany. It was signed in London by Dancia Penn, the BVI's Deputy Premier and Minister of Health and Social Development, and Germany's Ambassador to the United Kingdom Georg Boomgaarden. This TIEA became the 18th signed by the British Virgin Islands, the 17th TIEA was signed about a year ago. Based on the OECD model, it allows both parties to request information from tax authorities of the respective countries to assist in tax investigations.

The BVI and Germany signed joint declaration where it is stated: “The Federal Republic of Germany and the British Virgin Islands have long been active in international efforts in the fight against financial crimes and each share a common commitment to develop and comply with international standards on money laundering, terrorist financing and financial regulation. The BVI's cooperation in fostering these international standards enhances its reputation as a globally-integrated and responsible financial centre.”

Also, a protocol was included on the agreement providing that BVI and Germany had no intention to introduce any discriminatory, prejudicial or restrictive measures based on harmful tax practices so long as the agreement is in force and effective.

Brian Obvi,
Offshore Analyst

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Offshore Agreement Signed Between BVI and Australia

By the announcement of the Australian government, the Additional Benefits Agreements between Australia, the British Virgin Islands, the Isle of Man and Jersey have come into force.

These agreements help to prevent double taxation by allocation of the taxing rights over certain income of pensioners, students and government employees - residents of Australia, the British Virgin islands, the Isle of Man and Jersey. This kind of agreement also provides for a mechanism to deal with disputes arising from transfer pricing adjustments.

The Additional Benefits Agreement with the British Virgin Islands entered into force on April 12, 2010. As well as the other two jurisdictions, BVI have also signed TIEA with Australia.

By words of Assistant Treasurer, Senator Nick Sherry, these arrangements are part of the new taxation and financial relationship between Australia and the jurisdictions.

Brian Obvi,
Offshore Analyst

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BVI Identified as One of Special Tax Havens by Indian Government

The government of India approved notification of nine offshore jurisdictions as 'specified territories' to officially initiate information exchange with them and modify regulations to combat tax evasion. The tax havens classified as special territories are British Virgin Islands, Bermuda and Cayman Islands, Gibraltar (all of them being British Overseas Territories); also British Crown Dependencies Guernsey, Isle of Man and Jersey; Netherlands Antilles, and Macau, a Special Administrative Region of the People's Republic of China.

The special status of these jurisdictions allowed Indian government to officially initiate talks with them with regard to tax avoidance, exchange of information, and assistance in collection of income tax.

Brian Obvi,
Offshore Analyst

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BVI Territory Signs TIEA wil Ireland and China

December 7. The British Virgin Islands signed tax information exchange agreement with Ireland. The TIEA is based on a model agreement developed by the OECD, and will allow the British Virgin Islands to send requests to the Revenue Commissioners to obtain and provide information needed in the course of its tax investigations. Also, after this document is signed, the Revenue Commissioners from Ireland may request information from their counterpart in the British Virgin Islands.

The information relevant to Ireland's tax investigation issues in most cases would concern the bank accounts or the beneficial ownership of companies or trusts.

Another TIEA was concluded between the BVI and China, signed by BVI Premier and Minister of Finance, Ralph O’Neal and Chinese Deputy Commissioner of the State Administration of Taxation, Qian Guanlin.

In his statement after signing the agreements, O'Neal remarked that they were a significant milestone in relations between the Governments of the British Virgin Islands, China and Ireland, and expressed the commitment to examine other areas of mutual co-operation and benefit.

Previous TIEA was concluded by the BVI with the Kingdom of Netherlands in September 2009. With signing of these two agreements, total number of tax exchange agreements signed by the BVI Territory reached 17.

Brian Obvi,
Offshore Analyst

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Britain advices BVI and other tax havens to implement more taxes

On October 29, 2009, an independent review commissioned by the UK Government was issued, led by Michael Foot, former managing director of the UK's Financial Services Authority. The main concern of the report is the analysis of the situation in the offshore financial centres that are British Crown dependencies. These are Guernsey, Isle of Man and Jersey (where the situation is more favorable than in remote jurisdictions), and offshore territories Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos. All these countries have suffered from the global financial downturn, because their economy was to a much extent based on international finances, and, as Mr. Foot noted in the report, they must review their taxation policy to improve the situation.

Foot argued that the Caribbean offshore centres, including the British Virgin Islands, needed a diversified tax base. By his words, there is a need for value-added taxes, as well as corporate taxes, levied on companies' profits. These new taxes may be of great impact for the Caribbean tax havens, which have attracted international businesses by their low tax rates: the report states that the BVI and other British territories comprise nearly two-thirds of the offshore market.

Some of the offshore centres refused the implementation of new taxes, but Foot said that keeping tax rates too low might be harmful in the long-term and contribute to the increase of international pressure on tax havens.

Foot also said in the report that many of the territories received lower revenues as the sectors of tourism and finance which were of main importance for their economy suffered very much because of the worldwide economic crisis.

The report received the support of Government of Great Britain, which has varying degrees of control over the territories' domestic and foreign policy. By words of Stephen Timms, the Financial Secretary to Britain's Treasury, this report “sends a strong signal to overseas financial centres that they must ensure that they have the correct regulation and supervision in place.”

Brian Obvi,
Offshore Analyst

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BVI Signs TIEAs with the Kingdom of Netherlands, the Netherland Antilles and Aruba

In the mid of September, the Premier and Minister of Finance of the British Virgin Islands, Hon. Ralph T. O’Neal, OBE , signed additional Tax Information Exchange Agreements with the Kingdom of the Netherlands, the Netherland Antilles and Aruba. After signing these TIEAs, the number of agreements signed by the BVI achieved 15.

The BVI and the Netherlands already have legislation providing for co-operation and the exchange of information in tax matters. The new TIEA between the British Virgin Islands and the Netherlands will allow the exchange of information by request on civil and criminal tax matters.

The Netherlands State Secretary for Finance welcomed the signing of the Agreement. Both jurisdictions expressed common intention to pursue other areas of mutual co-operation to further develop their relations. The Kingdom of the Netherlands also further recognised the BVI Government's reputation as a constructive and co-operative member of the international community.

The 12 TIEAs standard set, that was required by the OECD, for the British Virgin Islands consisted of
the United States of America,
the United Kingdom,
Australia,
New Zealand,
France
and the Nordic Alliance including
Sweden,
Norway,
Finland,
Denmark,
Iceland,
The Faroes and
Greenland.

Premier O'Neal stated in his comments that the BVI is close to signing further TIEAs with other OECD countries with which they have not signed the agreements yet.

Brian Obvi,
Offshore Analyst

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Ralph O'Neal Signs TIEA with France, BVI having talks with Netherlands

Last week, the Prime Minister of the British Virgin Islands Ralph O'Neal signed Tax Information Exchange Agreement with France. The signing of this TIEA which had been already announced in the beginning of June brings their number for BVI to eleven, while twelve are required by OECD in its report on tax transparency and information exchange standards.

The tax agreement with France was signed by BVI Prime Minister and French Budget Minister Eric Woerth who commented that the signing of the agreement was “further evidence of the British Virgin Islands' willingness to implement the OECD principles of transparency and information exchange.”

It is worth saying that in a press conference before the document signing O'Neal talked on territory's intention to be removed from the OECD grey list. He said that the last needed agreement will be signed soon, but BVI will continue negotiations with other countries like Germany, Austria, Brazil, Mexico, Argentina, Canada and as many countries as they will make contact with.

Another related information from Europe: The tax minister of Netherlands Jan Kees de Jager said on June 25, 2009 that his country has reached agreement with Switzerland on exchange of tax and banking information. He also mentioned that he already agreed deals with Belgium and Luxembourg, Bermuda, Guernsey and Jersey. Currently the talks are ongoing with the authorities of the British Virgin Islands, Cayman Islands and Singapore.

The Dutch minister commented the already signed tax agreement with Switzerland saying that “the measure on exchanging financial information is part of a revision of the tax treaty between the Netherlands and Switzerland.”

Brian Obvi,
Offshore Analyst

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BVI premier going to France to sign tax agreement

On June 9, the Premier of the British Virgin Islands Ralph O'Neal reported during press conference about his plans to make visit to France, in order to sign Tax Information Exchange Agreement with French government. After the agreement with France will be signed, the number of TIEAs signed by the Territory will be already 11. So, the British Virgin Islands will come closer to the recommendations stated in the report issued by the Organisation for Economic Cooperation and Development and concerning tax transparency, and the new international tax standard of 12 tax treaties signed by each jurisdiction, established during the G-20 summit in April.

Ralph O'Neal stated in his comments that, after negotiations with France are complete and the TIEA signed, the BVI will continue to pursue similar agreements with other OECD countries in order to fully comply with the new standards, and be moved from the “grey” to the “white” list of jurisdictions. Some weeks ago, BVI Government signed tax treaties with the group of Nordic countries.

During the same press conference Premier was asked by media on the effects of the global financial crisis of the financial sector of the territory. He answered that the BVI Government is still “keeping a close eye on the Financial Sector”, but he did not say how many companies have been removed from the BVI IBC Register. He explained that the number of companies to be liquidated seems not to increase, but added that liquidation statistics solely cannot give information on how many companies in the industry have been affected.

Brian Obvi,
Offshore Analyst

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BVI Government Signs Tax Treaties with Nordic Countries

On May 18, 2009, the British Virgin Islands has signed bilateral tax information exchange agreements (TIEAs), as well as the series of commercial agreements, with the Nordic group of countries at Iceland's Embassy in Denmark. The agreements require the BVI to make available information relating to criminal or civil tax matters, and are said to reflect all governments' shared commitment to implement the Organisation for Economic Co-operation and Development principles of transparency and effective exchange of information. On behalf of the government of the BVI, the agreements were signed by Minister of Health and Social Development Dancia Penn, and Kristian Jensen, the Danish Minister of Taxation, and Ambassadors and senor representatives of Faroes, Finland, Greenland, Iceland, Norway and Sweden signed the agreements on behalf of their respective countries.

Now it can be assumed that the territory has become closer to getting off the “grey” list of international offshore centres, issued by the OECD - the list of countries that have not yet fully complied with rules on sharing tax information. BVI Premier Ralph O'Neal has said in his comments that the country will sign tax agreements with France and New Zealand, and then move to the so-called white list of fully compliant offshore jurisdictions.

Also, the BVI and the Nordic countries have signed commercial agreements concerning the avoidance of double taxation for enterprises operating ships or aircraft, and mutual agreement procedures and agreements for the avoidance of double taxation with respect to individuals. The governments of all countries which have signed the agreements have also stated that, while the TIEAs are in force, neither party will introduce any discriminatory, prejudicial or restrictive measures based on harmful tax practices.

Brian Obvi,
Offshore Analyst

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OECD Plans to Strengthen Standards Regulating Offshore Financial Industry

The OTCC Meeting in the course of which BVI signed taxation agreements, has been held in the period when the OECD prepared to crackdown on offshore and low-tax financial centres which were still deemed to be “uncooperative”. This was part of plans by the member governments of OECD to further strengthen regulatory safeguards in the global financial system, and followed the publication of parliamentary reports that accused the Foreign and Commonwealth Office of complacency in the monitoring of tax evasion and money laundering risks in certain offshore financial centres.

In the last period, the UK government has experienced the increasing pressure to enforce higher standards of transparency in some of the 14 offshore territories, which are still under British sovereignty, and among then there are British Virgin Islands.

According to the UK Authorities Report on Financial Services Regulation in BVI and other offshore centres, published in May 2008, the regulation standards in the areas such as banking, money laundering, insurance and securities are not as good as those in the Crown Dependencies (Jersey, Guernsey and the Isle of Man).

These claims and submissions were discussed by the BVI and the Cayman Islands, and by some other offshore centres among British dependencies. The offshore jurisdictions argued that they have brought their regulatory standards in accordance with the OECD FATF requirements.

The BVI government informed the Commons Select Committee on Foreign affairs that the claims that the so-called offshore centres are not properly regulated and are a haven for tax evasion, money laundering and terrorist financing, are unfair, and 'too often no effort is made to give recognition to the regulatory advances of such offshore jurisdictions as the BVI.'

Brian Obvi,
Offshore Analyst

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