Thursday, March 30, 2006

Offshore Corporate Administration – courses

Registration for the courses of the programme for offshore corporate administration that will be launched on the 4th of April will run through the 12th of April. Lectures will start on the 18th of April.Each course will consist of 10-12 one-and-a-half hour lectures a week. Twice a year, examinations will be held - in February and July. The cost of each course will be about $100, payable to the college on registration.

The other two courses are planned to be offered in autumn 2006. These will be on accounting fundamentals and investment. The courses will be required in order to complete the ICSA certificate level.

As to the advanced ICSA diploma and professional level courses, they will be offered through the programme as well - in the near future.

Offshore Corporate Administration like any other education programme is a good method of improving the total quality of services in every offshore jurisdiction. Taking into account that the British Virgin Islands are already offering high standards of offshore financial services, their efforts to raise the efficiency of services prove once again how seriously they treat their reputation of the leading offshore tax haven.

Also, the prices for the courses allow to suppose that the programme receives the support of the BVI government.

Wednesday, March 29, 2006

BVI Offshore financial services boost by Corporate Administration Programme

BVI Government Information Service has recently informed that the first on-island certification programme for offshore corporate administration would be launched. The programme will be conducted in collaboration with the Financial Services Institute of the H. Lavity Stoutt Community College (HLSCC).

On the 4th of April at 5.30 p.m. the programme will be launched at the HLSCC. It will start with a reception sponsored by an international offshore law firm specialising in private client matters, company and commercial law, commercial litigation - Conyers Dill & Pearman.

Tuesday, March 28, 2006

BVI Inland Revenue Department plans for 2006

It is expected that the BVI Inland Revenue Department will collect $43.6 million this year, which is about 20% of Government’s overall budget revenue of $233.1 million for 2006. This $43.6 millionis the figure that makes the Inland Revenue Department the second biggest revenue-earning agency for BVI Government, behind the BVI Financial Services Commission.

The Department administers taxation in the following 7 areas: hotel accommodation, motor vehicle rental, house and land, income, payroll, liquor licences and stamp duty. The BVI Inland Revenue Department, working under the Ministry of Finance, is responsible for administering the BVI’s tax laws as well as collecting taxes and fees due to the Government.

Monday, March 27, 2006

BVI Inland Revenue Department on tax laws changes

Last week BVI Inland Revenue Department hosted press briefing to raise awareness of the recent changes to some of the BVI tax laws.

Acting Commissioner of Inland Revenue Ms. Sylvia Moses said the recent changes to some of the Territory’s tax laws were necessary to meet the demands of the international community arising mostly from the fact that income tax in the BVI was zero rated in the end of 2004.

Main statements of Acting Commissioner of BVI IRD:

  • Fully automating tax operations of Inland Revenue Department is in the process.
  • Increased taxes will allow the BVI government to improve such social services as education and health care as well as the Territory’s infrastructure.
  • In 2005 the payroll tax was implemented. 8% should be paid by the employer and 8% should be paid by the employee. One amendment addresses the issue of those who have more than one employer. The total remuneration paid to an individual by employer/employers in a year maximum is covered by tax exemption of $7,500 covers. Accordingly, no matter how many jobs the individual has, payroll tax is due on all remuneration above $7,500.
  • Transfer on sale of property for non-belongers, under the Non-belonger Land Holding Regulation Act was increased from 8% to 12% of the price or the market value.

Saturday, March 25, 2006

BVI Business Company Act: New company types

Some aspects of the BVI legislation changes have already been described. Today I would like to mention another important aspect related exactly to BVI company incorporation.

This BVI Business Companies Act, 2004 (Amended 2005) allows more flexibility than the previous one. Only 1 (one) type of company could be incorporated under the BVI IBC Act – the company limited by shares. The incorporation of 7 (seven) different types of companies is provided by the BVI Business Companies Act. They are as follows:

  • companies limited by shares;
  • companies limited by guarantee not authorised to issue shares;
  • companies limited by guarantee who are authorised to issue shares;
  • unlimited companies not authorised to issue shares;
  • unlimited companies authorised to issue shares;
  • restricted purposes companies;
  • segregated portfolio companies.

Friday, March 24, 2006

The British Virgin Islands impact on Hong Kong's gross national product

According to the Census & Statistics Department, Hong Kong's gross national product in the 4th quarter (2005) stood at $369.4 billion, which is 4.2% up as compared with a year earlier.

In the 4th quarter, the Mainland, accounting for 28.5%, remained the largest source of Hong Kong's external factor income inflow. The BVI followed, reflecting continued investment income inflow from this tax haven economy, at 20.1%. Should be noted that Hong Kong companies had set up really a considerable number of holding companies in the BVI. The US and the UK were other major source jurisdictions at only 10.5% and 7.5%.

The Mainland and the British Virgin Islands, accounting for 23.5% and 18.5% of the total outflow, continued to be the most important destinations for Hong Kong's external factor income outflow in the 4th quarter. Other major destinations were the Netherlands at 8.7% and the US at 8.2%.

It’s hard to neglect the effect of offshore business registered in the BVI on Hong Kong economy as well.

Thursday, March 23, 2006

BVI offshore law practicioner Stephen Pollard with Conyers Dill & Pearman

In the end of 2004 Stephen Pollard left Allen & Overy to join the international offshore law firm Conyers Dill & Pearman in order to augment the firm’s growing BVI practice. It is obvious that many offshore firms are eager to get this offshore practicioner on the board in order to strengthen their operations related to the BVI.

As the associate of Conyers Dill & Pearman, Stephen Pollar has been successfully working on BVI law. One example of his work related to BVI IBC legislation is available for the public (on the BVI Business Companies Act 2004).

International offshore law firm Conyers Dill & Pearman advises on the offshore laws of the British Virgin Islands, the Cayman Islands, the Bermuda and Anguilla.

Wednesday, March 22, 2006

BVI offshore law practicioner Stephen Pollard joined Walkers

Stephen Pollard has recently joined Walkers' London office in order to work on the funds and corporate issues of the Cayman Islands and the British Virgin Islands.

This should strengthen this, normally Cayman Islands oriented, offshore law firm’s positions in BVI offshore products, particularly offshore investment funds. Previosly this outstanding BVI offshore law specialist worked with international offshore law firm Conyers Dill & Pearman.

Heidi De Vries, the managing partner of the Walkers office in the BVI is responsible for heading up the operations of the firm's BVI office. Her practice in the BVI lists advising on all aspects of corporate law in the BVI and on investment funds in particular.

Tuesday, March 21, 2006

FDI - it's time to remain or time to decline?

The Chinese Ministry of Commerce expects Foreign Direct Investments (FDI) into China to remain at the last year level. However, some experts suppose that in the country's 11th Five-Year Plan (2006-2010) total foreign investment into China could decline. It could affect the level of FDI generated by the British Virgin Islands companies, however such decline should not differ from decline of any other foreign investor country. There are no serious legislative or economical changes that should make an impact on FDI from offshore tax havens.

It is expected that China's legislature - the National People's Congress - will discuss a revision of the tax law. A unified business tax rate will be introduced in the tax law this year. Until that foreign companies in China will continue enjoying an income tax rate of 15%, while domestic companies are taxed at 33%.

A vice-director in the research office of the State Council Jiang Xiaojuan suggested that in the coming years China might experience a decline in FDI, but the country would become a more important overseas investor.

Monday, March 20, 2006

The BVI tops the China foreign investor list again

The Chinese Ministry of Commerce informed that in the first two months of the year around US$ 8.60 billion has been invested directly into China, which is 7.79% up, as compared with the same period last year.

The United States, Germany, the British Virgin Islands, Hong Kong, South Korea, Japan, Taiwan, Singapore, Samoa and the Cayman Islands are the top investing countries the investment of which accounted for 84.43% of the total.

Traditional offshore jurisdictions are leading the list. The BVI is on the second position. Hong Kong and the Cayman Islands - on the 1st and 10th.

China approved the establishment of 5,136 foreign-invested companies during the same period, which is 5.66%, as comparied with a year ago. The figures were given by the Ministry of Commerce without information on contracted investment (deals already signed, however, not yet executed).

The Chinese Ministry of Commerce has launched an English version of the website for foreign and offshore companies and groups searching for guidance. Now users can get information related to laws and regulations, statistics, key projects and investment promotions.

Sunday, March 19, 2006

Why offshore bank account should cost more

The following principle is clearly seen in this example – if you are a resident customer, the bank should take no fee for the account maintenance. If you are an offshore customer, there is $50 fee per month. It is not important how the bank calls this fee (account monitoring fee, maintenance fee or fee for not sending your account reports to your address), anyway, it is a fee for the possibility and necessity to save much with the help of the offshore bank, therefore you have to share more with the bank.

I will in short explain the situation to those who have heard the following news:
Recently there was a glitch in the Scotiabank computer system that erroneously charged some local BVI business accounts a monthly fee. For example, one local businessman got worried when he saw a $150 debit on the monthly statement of his firm.

This fee is meant for offshore accounts – for customers who are working on tax planning, avoiding and saving some money on taxes. Offshore accounts in offshore banks historically have been charged $50 each month for the accounts.

Of course, the wrongly-taken fee was reversed to customer after the error was noticed.

Saturday, March 18, 2006

Opening the offshore bank account. Economic justification

Recent misunderstanding connected with charging offshore banking service comission from the local BVI businessman’s account reminded of the reasons of higher fees on offshore business and economic justification of offshore incorporation and offshore banking.

When wisely establishing the offshore business structure, one will get:

  • on the one hand, some economy on taxes;
  • on the other hand, some additional expenses.
Usually people make prognoses on tax economy, but not everybody calculates how much additional resources creation and maintenance of this offshore business structure will take. These sums consist of many components, each of which may not seem large if taken separately. As with any business solution, it is worth to consider ALL the expenses and assure some reserve that can be foreseen before incorporating offshore business structure.

Friday, March 17, 2006

EU Savings Tax Directive effect in the BVI

The EU Savings Tax Directive applies only to individuals and therefore interest payments to companies fall outside the scope of the Directive. So it does not concern BVI IBCs.
This Directive does not apply to individuals, who are resident outside the EU, including EU nationals.

This scheme affects mostly banks, custodians, registrars and other financial institutions dealing with making interest payments to individuals in appropriate territories. Also, it can affect market operators purchasing money debts from individuals in prescribed territories or redeem money debts held by the above-mentioned individuals. This applies also to individuals holding or administering money debts on behalf of others or advising paying agents, for example, tax advisers, solicitors, accountants, etc.

The BVI government also declared that all private, professional and public mutual funds (excepting only a new class of public funds - restricted public fund) that are recognized or
registered under the Mutual Funds Act 1996 shall be treated by the BVI as non-UCITS
equivalents. Therefore they are are outside the scope of the Directive. As to restricted public funds – only they will be treated by the BVI as UCITS equivalents and, accordingly, they are within the scope of the Directive.

In accordance with Article 6 of the EU Savings Tax Directive and Article 9 of the BVI model agreements, “interest payment” is only income from UCITS or UCITS equivalents.
So, BVI non-UCITS equivalents fall outside the scope of the EU Savings Tax Directive. This means that BVI paying agents will not be required to apply a withholding tax or report information on income payments to investors.

More information about:

Thursday, March 16, 2006

Automatic exchange of information option

Type of information the British Virgin Islands banks or other paying agents will exchange under this option:

  1. The identity and residence of the beneficial owner.
  2. The name and address of the BVI paying agent.
  3. The account number of the beneficial owner.
  4. Information concerning the savings income.

The BVI paying agent is to report the above-mentioned information to the competent authority in the country where the account is held. Then, the information will be forwarded to the competent authority of the country where the EU resident individual actually resides.

Wednesday, March 15, 2006

Withholding tax option in the BVI

Under the withholding tax option, tax will be automatically deducted by banks (or other paying agents) from interest and other savings income earned. In order to implement the EU Savings Tax Directive in the BVI, they will pay the withholding tax to the Commissioner of Inland Revenue as the Competent Authority.

The withholding tax rates:
  1. from 1 July 2005 - 15%.
  2. from 1 January 2008 - 20%.
  3. from 1 January 2011 - 35%.

75% of the withholding tax levied will be remitted to the tax authorities of receiving EU
Member States, while 25% will be kept by the Commissioner of Inland Revenue.
The transfers of withholding tax to the EU Member States will be made at specific periods, but EU Member States that receive this tax will not receive information relating to EU resident individuals.

Tuesday, March 14, 2006

The British Virgins Islands and EU Savings Tax Directive, part two

Continued from British Virgins Islands and EU Savings Tax Directive.

On the 22nd of April, 2005, the British Virgin Islands Government announced that it will
implement a transitional withholding tax on bank interest or other savings income which is earned by the residents of the EU on investments held in the countries of their residence,
including other EU Member States as well as dependent and overseas territories.

As it is stated in the directive, there are 2 options how to proceed: automatic exchange of information and withholding tax.

The BVI has decided to offer the choice between the withholding tax option or the automatic exchange of information option to EU resident individuals. As to banks and other paying agents, they can offer EU resident individuals deduction of withholding tax or exchange of information.

Monday, March 13, 2006

British Virgins Islands and EU Savings Tax Directive

The EU Savings Tax Directive, which went into effect on the 1st of July, 2005, is a part of a European Commission tax reform. Savings Tax Directive introduces information exchange regime to apply across the EU, with all countries agreeing to report interest on savings paid to the citizens of other EU States to those States' tax authorities. As an alternative it is possible to apply a withholding tax (at 15%) instead of information exchange. This alternative is for countries with banking secrecy traditions.

Almost all UK offshore financial centers are also affected by this directive. The British Virgin Islands also falls into this category. It is interesting to know that the EU functionaries have forgotten to include into the initial list the UK dependent territory Bermuda.

As it’s clearly declared on HM Revenue & Customs site, the directive aims to counter cross border tax evasion by collecting and exchanging information about foreign resident individuals receiving savings income outside their resident state. Effective taxation by exchange of information – just as simple as that.

By the way, today is the second Monday in March. It is a public holiday on the BVI - Commonwealth Day.

Saturday, March 11, 2006

Changes in BVI IBC Act in 2004

2004 year came with new amendment to the BVI BC Act. It became quite clear that it won't be possible to implement the new law completely till the 31st of December, 2004, and then new, more realistic terms were stated. The companies were granted 7 years to comply with the bearer shares regime introduced by the IBC (Amendment) Acts 2003 and 2004, which came into force on the 1st of January 2005. The previous deadline stated at the 31st of December 2004 was changed into the 31st of December 2010. This decision was effected by the recommendations given by the private sector panel that a transition period should be provided before the new regime is completely effective.

Also the licence fees was changed from US$ 300 to US$ 350 and from US$ 1,000 to US$ 1,100.

The practical effects of these changes was different for the existing IBCs incorporated before the 1st of january 2005, and new IBCs.

  • For existing IBCs, bearer shares already issued have to be placed with a licenced custodian, or exchanged for registered shares by the 31st of December 2010. Bearer shares that are issued on or after the 1st of January 2005 have to be placed with a licenced custodian immediately upon issuance.
  • The existing IBCs having the power to issue bearer shares but not using it, will need to amend their Memorandum and Articles of Association by the 31st of December 2010, by including a prohibition against the issuance of bearer shares. By this they will avoid the payment of a higher licence fee.
  • As regards fees, then from 2005 till 2008 the current licence fee of US$350 will continue to apply to all IBCs with an authorised share capital of uS$50,000 or less. Then, an increase in the annual licence fee will be applied until the 31st of December 2010, to the IBCs which continue to permit the issuance of bearer shares under their M&A. Starting from the year 2011, an annual licence fee of US$1,100 will be applied to all IBCs which continue to permit the issuance of bearer shares in the M&A
  • The existing IBCs will establish and maintain the Register of Directors within 12 months from the 1st of January 2005. The Register of Directors should contain details of directors actual on the 1st of January 2005 and all the changes in this information thereafter. The history before the 1st of January 2005 is not needed.
  • The newly formed IBCs having the power to issue bearer shares will pay higher annual licence fee. Also, they are required to keep the bearer shares with an approved custodian upon issuance.
  • Current annual licence fee of US$350 will remain for the new IBCs with an authorised share capital of US$50,000 or less and without the power to issue bearer shares.
  • The Register of Directors should be kept at the BVI registered offices of all IBCs. The Register of Directors should not be filed at the Registrar of Companies, and information about the directors will continue to remain confidential to the third parties.
So shortly that’s the story about changes in BVI IBC Act.

Friday, March 10, 2006

Changes in BVI IBC Act till 2003

In June 2000, industry practitioners were informed by the British Virgin Islands Chief Minister about the intention of the government to amend the BVI IBC Act (International Business Companies Ordinance – Cap. 291) that would restrict the mobility of bearer shares. This new law shall be aimed at making IBCs more transparent.

In November 2002, an Aide Memoire was issued by the Financial Services Commission in order to advise both industry practitioners and other interested stakeholders. The subjects of advising were contents, principles and purpose of the proposed bill.

Not the abolishment of bearer shares, but immobilisation was chosen as far as it is considered to be an effective way of keeping bearer shares and ensuring that beneficial ownership is known.
One of the reasons was bad experience of the Bahamas, where a big loss of businesscame as a consequence of the abolishment of bearer shares.

On the 17th of April, 2003, the International Business Companies (Amendment) Act, 2003, was passed by the British Virgin Islands Legislative Council. On the 5th of May, 2003, this act was approved by the Acting Governor.

The IBC (Amendment) Act 2003 introduces the following:

  • a definition of bearer shares (in the IBC Act of 1984, there was no definition of bearer shares);
  • requirement for bearer shares to be deposited with a Custodian or exchanged for registered shares (the M&A should be modified so that bearer shares are no longer allowed);
  • annual license fees for a company having the right to issue bearer shares was increased from US$ 300 to US$ 1,000;
  • principle that if client has bearer shares, which he wants to sell, the custodian may deliver the bearer share certificates only to another custodian agreeing to hold the certificates;
  • requirement to maintain the Register of Directors (name, address, date appointed/ resigned/ removed) at the Registered Office of the company.

The deadline was stated – the 31st of December, 2004.

To be continued on BVI IBC Act changes 2004-2005 tomorrow.

Thursday, March 09, 2006

Changes in BVI IBC Act

Another consequences arising from international pressure and FATF and OECD criticisms rather than KPMG report are changes in British Virgin Islands IBC Act (now it is The BVI Business Companies Act). By international pressure should be understood the frequency of claiming that offshore financial centres are tax havens offering illegal shelter to tax dodgers and laundering dirty drug money to those who have it. This has been said and is still being said not particularly about the BVI, but about the offshore industry as a whole.

It's not a secret to anyone that offshore jurisdictions fight against dirty money laundering. The only difference is what each offshore centre considers to be dirty as well as what it gains and what it loses when introducing some changes.

In the beginning of the century many offshore jurisdictions started changing the legislation regulating offshore companies in order to make companies more transparent. Registration of the shareholders and directors was one of the spheres that was influenced by this most of all.

Some jurisdictions even abolished bearer shares (for example, the Bahamas after blacklisting* in 2000), but the BVI went another way. Under the new BVI BC Act, all bearer share certificates are required to be deposited with a custodian (Authorized Custodian or Recognized Custodian) and the annual government fees for companies with bearer shares have been substantially increased to US$ 1,100. The old companies are granted a grace period.

* NCCT Annual Report 1999 – 2000 contains the following information on Bahamas: “In particular, there is a lack of information about beneficial ownership as to trusts and International Business Companies (IBCs), which are allowed to issue bearer shares

To be continued on the BVI IBC Act changes 2003 – 2005 tomorrow.

Wednesday, March 08, 2006

Offshore Capital coming back & Direct Foreign Investments

The China officials have reported that the total FDI (Foreign Direct Investments) in January 2006 was USD 4.55 billion, which is 10.99% up comparing to USD 4.1 billion January 2005.

The Ministry of Commerce reported that during the given period the largest sources of foreign direct investment were Hong Kong, Germany and the British Virgin Islands.

Another evidence of the successful marketing campaign of the British Virgin Islands in China. It is a message that BVI jurisdiction and its IBC are welcomed in the country and there are substantial benefits of using this jurisdiction when entering one of the most perspective world’s markets.

By the way, not every BVI IBC is really the foreign investor in China. These companies, sometimes owned by Chinese and properly structured by Hong Kong or other lawyers, return offshore profits back to the country.

Tuesday, March 07, 2006

BVI FSC Creation & KPMG Review 2000. Part Two.

continuing from The main purposes of BVI FSC

After publishing the report the official statements came. They expressed that it has been mutually agreed that the Overseas Territories will give priority to three particular recommendations stated in the KPMG report. These three priorities for action are as follows:

  • legislation for the establishment of independent regulatory authorities;
  • any necessary enhancements to their laws and systems for combating money laundering;
  • introducing legal powers that would allow regulatory authorities to get key information and share it with overseas regulators to assist their investigations.

The UK authorities took the responsibility to work with each Overseas Territory in order to put suitable measures in place. They expected to see the necessary steps being substantively in place already by 30 September 2001.

The British Virgin Islands was one of the offshore jurisdictions about on the review as well as public statements were.

As you know, FSC in the BVI was established in December 2001.

So, make conclusions on whether the review served as catalyst or more than that yourselves.

Monday, March 06, 2006

H. Lavity Stoutt's Birthday and 2 earthquakes in the BVI

The 6th of March, which is today, is the day to remember and honour Hamilton Lavity Stoutt, the BVI Territory’s first Chief Minister. H. Lavity Stoutt’s has made immeasurable contributions to the BVI, and is often called the “father” of the modern British Virgin Islands.

Today is the 77th anniversary of H. Lavity Stoutt’s birth.

The 6th of March is a national holiday in the BVI, accordingly, you hardly can do any business here today. Of course, it will not prevent you from making a wire transfer from your offshore bank account by using the Internet banking or conclude some contract with your BVI IBC, however it would be nice at least to remember about this great person and be thankful to the creator of the BVI – the one which it is like nowadays.

H. Lavity Stoutt born to Isaiah and Idalia Stoutt of Long Bay was the eighth child in their family. He attended primary school at the West End Methodist Church. Then he successfully studied at the new, BVI Secondary School.

Luckily, 2 recent earthquakes did not disturb the holiday. No serious damage has been reported in the BVI. As you may know moderate earthquakes measuring a magnitude of 5.3 and 4.4 on the Richter scale were felt in the British Virgin Islands on the 3rd of March, 2006.

Sunday, March 05, 2006

Was BVI FSC Creation a Reaction to KPMG Review 2000?

In accordance with the official version of FSC – no. FSC considers that this recommendation served as a catalyst in bringing the Commission to fruition, however it would not be accurate to say that FSC was a direct response to the KPMG report.

Let's have a look at its history.

In 2000, as ordered by the UK and the Caribbean Overseas Territories and Bermuda, the independent review was made by KPMG. The goal – assessing the extent to which these Caribbean offshore tax havens comply with international standards and good practice in regulating their international financial sectors. The review was the analysis of the position of each offshore country individually in terms of the extent and range of financial business conducted and the effectiveness and strength of their regulatory regimes.

This review was published in October, 2000.

To be continued tomorrow.

Friday, March 03, 2006

The main purposes of BVI FSC

We have already been talking about FSC and its tasks. Today I'd like to explore on BVI FSC tasks particularly in the sphere of combating.

In short and nice words, the regulation and supervision of its service providers protecting consumers and safeguarding the interests of the Territory as a whole is the cardinal responsibility of the FSC. The commission is to ensure industry compliance with the highest international regulatory standards and best business practices.

If not trying to avoid less nice words and call the things as they are, it could be said that the tasks of the Commission are as follows:

  • Combating money laundering.

It has the necessary legislative, regulatory and administrative structures that include all crimes anti-money laundering code of conduct for service providers. In its turn, the legislation establishes a financial intelligence unit for the receipt and processing suspicious reports.

  • Combating the financing of global terrorism.

All UN resolutions aimed at countering the financing of terrorism adopted by the UK have been given the same full legislative effect in the BVI as an Overseas Territory of the UK.

Thursday, March 02, 2006

Holidays coming to the BVI

The Holiday season is coming to the British Virgin Islands (almost all holidays here are from March to August). If you have business connections with the BVI, use offshore bank account in the BVI, take into account the following:

H. Lavity Stoutt's Birthday - Monday, 6th March
Commonwealth Day -
Monday, 13th March
Good Friday - Friday, 14th April
Easter Monday -
Monday, 17th April
White Monday - Monday, 5th June
Sovereign's Day - Saturday, 10th June (to be confirmed)
Territory Day - Monday, 3rd July (in lieu of 1st July)
Festival Monday - Monday, 7th August
Festival Tuesday -
Tuesday, 8th August
Festival Wednesday -
Wednesday, 9th August
St. Ursula's Day - Monday, 23rd October (in lieu of 21st October)
Christmas Day - Monday, 25th December
Boxing Day - Tuesday, 26th December

Wednesday, March 01, 2006

Tax information exchange between the BVI and Australia

The enforcement activities involving offshore transactions have recently been intensified by the Australian authorities. This happened because it became apparent that many funds flowing in and out of the country were being transmitted through offshore territories.

Australia's Deputy Commissioner of Taxation, Paul Duffus stated that about an A$5 billion (which is US$3.7 billion) leaves Australia for these jurisdictions every year. He also indicated that the government suspected that the money might flow through these countries illegitimately.

As a consequence of this came the talks of the Australian Tax Office (ATO) with the British Virgin Islands, the Cayman Islands, Anguilla, Antigua & Barbuda, Grenada, Guernsey, Jersey, the Isle of Man and the Netherlands Antilles. These talks were aimed at completing tax information exchange agreements.

Last year the tax information exchange agreement with the Bermudas was concluded. Perhaps, it's not long to wait until the agreement with the British Virgin Islands will be concluded... as well as with other countries from the list.

It is essential that the BVI concluded this agreement under mutually profitable conditions and that the interests of offshore businessmen and investors were taken into account and did not suffer as far as businessmen and investors hold their businesses on legal bases as well as preserve the image of BVI IBCs and offshore jurisdiction as a whole.