The
British Virgin Islands have double tax treaties
with the UK, Japan and Switzerland; in the
last two cases, this means just that the
UK's treaty with the countries concerned
has been extended to the BVI. Prior
to the introduction of the BVIBC Act, the
benefit of these Double Tax Treaties applied
only to BVI resident companies, which had
to take the form of Companies Act (Cap.
285) Companies (see Forms
of Company). Since the overwhelming
majority of BVI companies took the form
of the International Business Company, the
International Limited Partnership or the
Trust, all of which were exempt from taxes
and fell outside the ambit of the Double
Tax Treaties, offshore investors were not
in a position to use the BVI Double Tax
Treaties.
British
Virgin Islands Other International Agreements
The
British Virgin Islands has a Mutual Legal
Assistance Treaty with the USA. Following
pressure in early 2000 from the OECD and the
Financial Stability Forum of the G7, the BVI
announced in June that it would include within
the parameters of the treaty access to information
relating to criminal tax investigations and
that it would eliminate the requirement for
dual criminality. This would be accompanied
by the introduction of Compulsory Powers Legislation
to provide for access to information within
the BVI.
In
April, 2002, the British Virgin Islands Government
announced that an agreement had been reached
with the OECD without compromising the BVI's
principle of 'even keel' across all nations.
Robert
Mathavious, Managing Director of the BVI Financial
Services Commission, commented: "We are
pleased that an agreement with the OECD can
be reached without compromising our established
views. We are confident that working with
the OECD will enable us to retain our position
as a leading financial centre. We are pleased
to be accepted, and invited to participate,
as a full and equal partner in the OECD forum
of activities."
At
the same time, the BVI announced the signing
of a new Tax Information Exchange Agreement
with the United States of America.
Speaking
after the signing of the agreement, BVI Governor,
then Frank Savage, observed that allowing
the US Internal Revenue Service to pierce
banking secrecy in cases of tax evasion and
money laundering, clearly demonstrated that
the country had been working "to increase
the transparency of our systems and reduce
the potential for abuse."
Then
US Treasury Secretary, Paul O'Neill said that
the Bush administration welcomed the agreement
with the BVI, explaining that: "We have
an obligation to enforce our tax laws because
failing to do so undermines the confidence
of honest taxpayers of our system. One of
the keys to enforcement of our tax laws is
access to needed information."
In
2003 the BVI set up a Financial Investigation
Agency. This agency functions as a specialist
investigative law enforcement arm of government.
Its primary focus will be to investigate the
BVI financial services industry and support
the BVI mutual legal assistant regimes.
The
Agency was officially launched in 2004. Highlighting
the agency’s launch as an example of
the territory’s dedication to upholding
international initiatives to combat financial
crime, then Chief Minister Orlando Smith commented:
“This commitment is the foundation of
our entire financial industry and, I can assure
you, it will always be a top priority for
this Government”.
The
FIA took over the role formerly carried out
by the Royal Virgin Islands Police Force.
In
January, 2006, a prospective Tax Information
Exchange Agreement (TIEA) between Australia
and the British Virgin Islands was reportedly
derailed at the last minute because the Caribbean
jurisdiction was holding out for special concessions
from Canberra as an inducement to sign the
agreement.
In
July 2006, Chief Minister Orlando Smith revealed
that the territory's government was considering
its future participation in the Caribbean
Single Market Economy (CSME).
Although
the BVI is not taking part in the single market
process, Dr Smith stated that the government
will continue to examine the pros and cons
of participation, particularly from the trade
angle.
“We
are actively engaged in following the process
to see clearly what the disadvantages and
benefits could be whether we are in or out
of that process,” the Chief Minister
explained at a media briefing following the
recent meeting of Caricom heads of government,
and the 43rd meeting of the Organisation of
Eastern Caribbean States (OECS). “This
is because we are speaking about things like
trade relationships, which could be important
in the future,” he added.
In
August 2007, it emerged that the the British
Virgin Islands Financial Services Commission
and the Jersey Financial Services Commission
had signed a memorandum of understanding designed
to further co-operation between the two regulatory
bodies.
The
MoU establishes a formal basis for co-operation,
including the exchange of information and
investigative assistance. Such collaboration
should help to protect investors and depositors
and to promote the integrity of financial
services markets in Jersey and the British
Virgin Islands.
John
Harris, Director General of the Jersey FSC,
said: “I am delighted that we have been
able to conclude formal arrangements for sharing
regulatory information with the British Virgin
Islands Financial Services Commission. A number
of finance industry firms have a presence
in both jurisdictions and this Memorandum
of Understanding will ensure that where regulatory
information needs to be exchanged it can be
done in a rapid and efficient manner.”
Robert
Mathavious, Managing Director and Chief Executive
Officer of the BVI FSC, added: “As leading
international finance centres, Jersey and
the BVI have cooperated formally and informally
on regulatory matters over a number of years.
I am delighted that this Memorandum of Understanding
will enable us to work more closely together
to the benefit of both of our regulatory regimes.
For the BVI FSC, the Memorandum is a further
sign of our commitment towards effective international
cooperation that builds our capacity as a
world-class jurisdiction.
He
added: “The business communities in
the BVI and Jersey already work closely together
in many ways. The Memorandum of Understanding
will provide them with further assurance of
being able to rely on high quality regulation
in both jurisdictions.”
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