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BRITISH VIRGIN
ISLANDS OFFSHORE ACTIVITIES
- BRITISH VIRGIN
ISLANDS CASE STUDIES
The
Internet has yet to have much direct impact on
the conduct of offshore business from the British
Virgin Islands, but as with all other aspects
of business activity, no one can doubt that there
will be an impact, that it will be soon, and that
it will be substantial.
Liberalization
of the BVI telecoms sector got off to a messy
start in February 2007 when Cable and Wireless
was granted a one month extension to its BVI licence
to operate fixed voice, data network and international
services; the company's 40-year monopoly license
expired on 31st January.
Seemingly
undecided on the issue of licences, the BVI's
new Telecommunications Regulatory Commission gave
the company an extension to the end of March that
year. It also extended the licences held by Caribbean
Cellular Telephone and BVI Cable TV.
The
situation was finally resolved in late April 2007,
when the government invited each of the three
licensed public suppliers to apply through the
Telecommunications Regulatory Commission for licences
to operate across all three sectors: fixed line,
mobile and cable. Applications were due by close
of business on May 4, 2007.
Once
approval is given, licences will be issued to
the current operators under Sections 15.(2), 15.(3)
and 15.(4) of the Telecommunications Act for a
period of 15 years. At the end of the first three
year period, however, the Minister will conduct
a review to determine if the market can accommodate
additional telecommunications operators.
In
March 2007, CCT Global Communications, which at
the time held the only mobile phone services licence
in the British Virgin Islands, signed an Interconnection
Agreement Memorandum of Understanding (MOU) with
monopoly fixed-line provider Cable & Wireless.
There
had been a war of words between the companies
pending the issue of new unitary licences and
CCT Director Meade Malone had accused Cable and
Wireless of predatory behaviour, asserting that
C&W had attempted to drive CCT into bankruptcy,
continued to charge it interconnection rates above
its own retail tariffs, and had disrupted CCT's
network by testing a wireless communications system
over the same frequencies used by CCT. Cable &
Wireless chief executive Vance Lewis has denied
behaving unreasonably towards CCT.
In
May 2007, pan-Caribbean mobile telecommunications
provider Digicel Group revealed that it had obtained
leave from the Courts of the British Virgin Islands
to file an application for Judicial Review, and
had also obtained an Interim Injunction relating
to the Telecommunications Regulatory Commission’s
(TRC) failure to deal with Digicel’s application
for a mobile license.
Digicel
maintains that its application to operate a GSM
license in the British Virgin Islands has not
been addressed in accordance with the Telecommunications
Act, which stipulates that each application must
be considered on an objective, transparent and
non-discriminatory basis.
The
BVI government had attempted to argue that there
there was no constitutional or legal obligation
on the government to open the market immediately
to applicants, entrants or full competition. It
also said that Digicel has no unfettered right
to apply for a license. However, the BVI government
was overruled by the BVI Court and Digicel was
duly awarded its mobile licence.
Digicel
has earmarked USD15 million as its initial investment
to build a state of the art mobile network offering
close to 100% population coverage.
“Digicel’s
goal is to become the number one mobile operator
in the British Virgin Islands and we expect to
rapidly roll out services in this market,"
said Digicel Group CEO Colm Delves.
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British
Virgin Islands Offshore Activities
The natural bonding of the Internet and Offshore
stems from the fact that both, of their nature,
manage to avoid tax. Businesses which can operate
on the Internet without, so to speak, touching
ground in a high-tax jurisdiction will naturally
migrate to offshore jurisdictions; while business
that already have offshore existence will find
it highly convenient to be able to use the Internet
to trade with their high-tax customers without
having to make a landing in their countries.
As
a major offshore jurisdiction with hundreds of
thousands of offshore enterprises already installed,
including many investment funds and insurance
companies, it is only a matter of time before
the BVI becomes a centre of e-commerce activity.
The island's geographical location, its good telecommunications
links and its sophisticated business infrastructure
add to the inevitability of an e-future for the
Islands..
By
locating websites in the BVI to carry out functions
previously based in high-tax jurisdictions such
as sales and marketing, treasury management, supply
of financial services, and most of all, the supply
of digital goods such as music, video, training,
software etc, businesses can take advantage of
low rates of taxation for increasingly substantial
parts of their operation.
In
many countries, the distribution of goods from
a warehousing facility does not constitute the
carrying on of a trade or business in that jurisdiction,
so that even for physical goods, in many case
it will be possible to avoid a permanent establishment
(taxable presence) altogether in many high-tax
jurisdictions where trading activities currently
take place.
For
information about the impact of e-commerce on
a number of the main offshore activities which
take place in the BVI, click on a link below to
go to our specialist E-commerce site Offshore-e-com.com
Sales and Distribution of Physical Products
Sales
and Distribution of Digital Products
Banking
and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of legal
and tax issues surrounding offshore e-commerce,
click
here.
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British Virgin Islands Case Studies
This section will contain case studies of e-commerce
solutions applied to offshore business activities
carried out from the British Virgin Islands. The
case studies will be developed in association
with lowtax.net
partners. Contact us
to learn more.
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