British Virgin Islands: E-Commerce

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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. Licences were 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 earmarked USD15 million as its initial investment to build a state of the art mobile network offering close to 100% population coverage, a goal that has very nearly been achieved.

In January, 2011, four telecommunications codes were gazetted. The codes are designed to strengthen the legal framework for telecommunications in the areas of investigation of consumer complaints, quality of services, exchange of the Internet traffic as well as transparency of the activities of the Telecommunications Regulatory Commission (TRC).

“Publication and coming into force of important parts of the Telecommunications Code is an important milestone for us. These documents will not only provide better clarity and transparency to all the stakeholders, but will also enable the TRC to even better protect rights of users of telecommunications services and ensure resiliency and quality of the national telecommunications network.” CEO of the TRC, Mr. Tomas Lamanauskas, commented.

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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

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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