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.

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."

BVI Among Major Foreign Investors in Nepal in 2012/2013

According to the Department of Industry of Nepal, the amount of Foreign Direct Investment (FDI) in the economy of the country increased by 163% in year 2012/2013, as compared to the previous fiscal year. In 2012/2013, 275 joint venture companies were registered in the country. They have committed to make investment of Rs 18.84 billion, while in 2011/2012 FDI commitment was Rs 7.14 billion.

British Virgin Islands is at the top of the list of countries investing in Nepal, in terms of commitment amount, with investment commitment of Rs 4.49 billion. The BVI is followed by Hong Kong with investment commitment of Rs 3.07 billion, and India with as much as Rs 2.45 billion. In terms of number of companies, China is on the leading position with 87 joint ventures, followed by India. Most of FDI from China and Hong Kong are in the sector of hydropower projects and infrastructure development.

BVI Dominates by Volume of New Offshore Company Incorporations

According to a report from Appleby Global, one of the world’s largest providers of offshore legal, fiduciary and administration services. the British Virgin Islands jurisdiction “continues to dominate” by the volume of new offshore company registrations, with a six-fold lead over the Cayman Islands, which is the nearest comparator of the BVI.

The Group’s latest On the Register Report is devoted to the analysis of company incorporations in the British Virgin Islands, Cayman Islands, Bermuda, the Crown Dependencies, Mauritius and Seychelles, and how activity in these offshore jurisdictions compares to financial centres such as the UK and Hong Kong. 

Appleby stated in the release that the number of new offshore company registrations decreased both in the BVI and the Cayman Islands in the second half of 2012, with a 12% drop to 29,225 new company registrations in the British Virgin Islands, and 13% drop to 4,176 new registrations in the Cayman Islands. Appleby reported an overall decrease of 3.6% in company incorporation activity in the major offshore markets in the second half of 2012, indicating the impact of uncertain global economic conditions on the majority of the offshore markets.

By words of Farah Ballands, the partner and global head of fiduciary & administration services at Appleby, “There are signs that 2013 will be a watershed year in terms of seeing a universal return to pre-2009 activity levels across the offshore jurisdictions.”