BVI Appears on EU “White List” of Jurisdictions

The British Virgin Islands became one of 16 countries placed on EU white list, which was revealed in the last weeks of February. The jurisdiction was whitelisted partially due to economic substance legislation enacted at the end of 2018, which allowed the BVI to be placed on the EU’s “Annex II” of jurisdictions with “pending commitments.” The deadline extensions were granted to give time to the British Virgin Islands to pass the needed reforms to fully comply with co-operation standards. Thus, the country avoided being placed on “Annex I” (the blacklist).

BVI Premier Andrew Fahie welcomed the decision of the European Union, having said in his statement: “This is as a result of close cooperation and positive dialogue with the EU and demonstrates the BVI’s commitment to meeting and surpassing international standards.” He also added that he and his government “remain completely focused on ensuring the continued success of our international business and finance centre and its role in the global economy. We believe there will be significant opportunity for our territory and our people as we enhance our economic substance yet further.”

The 16 new whitelisted jurisdictions, along with the Virgin Islands, are Antigua and Barbuda, Armenia, the Bahamas, Barbados, Belize, Bermuda, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, St. Kitts and Nevis and Vietnam.

Final Economic Substance Requirements Issued by BVI International Tax Authority

The BVI International Tax Authority has finalized the regime of new economic substance rules. The new rules, effective from the beginning of 2019, are included in the Economic Substance (Companies and Limited Partnership) Act, 2018.

According to the new requirements, which are effective in the large part of the European Union, and which have been supported by OECD BEPS Inclusive Framework members, the companies tax resident in a low or no tax jurisdiction and engaged in key activities identified by the EU, in order to access the tax regimes of the territory are obliged to meet minimum substance requirements as part of their annual tax return. 

In some business sectors, activities generating income must be primarily conducted with qualified employees and operating expenditure in the jurisdiction. Among the main activities identified by the European Commission Code of Conduct Group there are banking, insurance, financing and leasing, fund management, shipping, intellectual property, and holding companies whose income is generated from any of the above activities.

For each of the core activities standards vary to reflect the different needs of the companies involved, and are to ensure that there are sufficient activities undertaken in the relevant jurisdiction to reflect the amount of profits accounted there. The substance requirements will include being able to demonstrate that the company is directed and managed from the relevant jurisdiction, has physical office and sufficient level of employees and annual expenditure.

BVI Urged UK Government to Back Modern Partnership with OTs

At the recent meeting at the House of Commons with Andrew Rosindell, MP, chairman of the the Overseas Territories All Party Parliamentary Group in the UK government, the special representative of the British Virgin Islands urged to support the renewal of partnership with Overseas Territories including BVI.

Benito Wheatley welcomed the position of the UK government stated by the Foreign and Commonwealth Office not to force the OTs to adopt the UK decisions on the Territories in areas of governance “constitutionally devolved to them without their consent”. He added: “It is now time for the UK Parliament to support a renewal of the modern partnership between the UK and Overseas Territories based on the principle of self-governance and we hope there will be no further parliamentary moves to undermine the UK Government position that rejects the use of Orders in Council against the Territories.” 

Wheatley also praised Rosindell for his long-standing support to the Overseas Territories including BVI and for respecting their constitutions. It is known that the UK government is taking steps to mitigate possible adverse effects that Brexit, which is now planned on October 31, can have on the British Virgin Islands. Governor Augustus Jaspert stated that many of the benefits that the BVI currently receives from its association with the EU, including EU funding and trade benefits, would go unchanged when Brexit is finalised - among them.

BVI will Choose New Premier, Political Parties are to Adhere to Code of Conduct

Political parties which will participate in the general elections in the British Virgin Islands on February 25, 2019, as well as the general public, are asked to strictly adhere to the provisions of the Code of Conduct. According to the statement of the BVI government, “The Code of Conduct now exists for political parties and candidates with the 2019 amendment to the Elections Act now in force. The purpose of the code is to promote conditions that are conducive to free and fair elections, and a climate of tolerance in which electioneering activity may take place without fear or coercion, intimidation or reprisals.”

The code consisting of 11 clauses covers the following areas: politically-motivated violence or intimidation, prohibited conduct: conduct during polling period, announcements of results of elections and respect for media and journalists. 

During the elections, the new political leader will be chosen for the BVI, as Orlando Smith has retired from his post of the territory’s premier. Mr. Smith’s National Democratic Party (NDP) has fractured, opening the possibility for a new party, the Progressive Virgin Islands Movement, to enter the government after long years of the NDP and the Virgin Islands Party domination. The VIP also fractured after the 2015 elections: Andrew Fahie will lead the VIP, while Julian Fraser split to form his own party, the Progressives United.

The new BVI government will face many issues, including the BVI financial sector challenges and the possibility of being potentially blacklisted by the European Union and being subject to the recently implemented UK beneficial ownership rules.

BVI Passes The Economic Substance (Companies and Limited Partnerships) Act

According to the announcement of BVI Premier and minister of finance, Dr Orlando Smith, the territory has passed The Economic Substance (Companies and Limited Partnerships) Act, 2018, which came into force on January 1, 2019. This is an important legislation addressing the EU’s concerns over “economic substance”, ahead of the December 31 deadline set by the European union for the British Virgin Islands and other financial centres.

In his comments BVI Premier said: “The government has engaged closely with EU officials over the last 18 months to understand and address the concerns that have been raised and has consulted on a regular basis with representatives of the financial services industry. Dialogue with the industry will continue to ensure smooth implementation of the new requirements and the International Tax Authority is issuing a guidance note to accompany the new Act.” 

Also, the BVI government admitted that the legislation will create challenges for some companies and limited partnerships, mostly due to the compressed timeline. It is expected that the formal response of the European Union will be given after some months.

BVI Government Approved Bill on the Issue of Economic Substance

BVI Premier and Minister of Finance Dr Orlando Smith announced that the BVI Government has taken measures to respond to the EU’s listing of non-cooperative jurisdictions, and will take reasonable steps to address EU economic concerns. The government approved the Bill , which is planned to be considered in the House of Assembly on December 13, and to come into effect by December 31, 2018, which is the EU deadline.

The new legislation will provide further assurance which was required from the BVI on the issue of ‘economic substance’. It is to introduce economic substance requirements for all business companies and LPs which are registered and tax resident in the British Virgin Islands.

Every corporate service provider will have to know where the company or limited partnership is tax resident and must be ready to provide that information to the BVI’s competent authorities. If tax resident in the BVI, they must show ‘economic substance’. Companies or LPs must, in relation to any relevant activity, carry out core income generating activities in BVI. Among them are: banking business, insurance business, fund management business, finance and leasing business, headquarters business, shipping business, holding business, intellectual property business, and distribution and service centre business.

For the last months, the BVI government had regular consultations with representatives of financial services industry, to address the concerns, and will continue dialogue for smooth implementation of the new requirements.

BVI Eligible for Association Membership in the Caribbean Forum

CARIFORUM director has confirmed that the British Virgin Islands is eligible for associate membership in this regional organization which engages in policy dialogue with the European Union on behalf of a number of Caribbean states. Confirmation of BVI eligibility became part of a CARIFORUM regional consultation in Barbados in April, which focused on establishing an effective platform for dialogue between CARIFORUM and French Caribbean Outermost Regions and British and Dutch OCTs.

The BVI will no longer be treated as OCT after the UK exits the European Union in March 2019, so the government of the territory is seeking the way to continue BVI current relationship with the EU through CARIFORUM. Currently member states of CARIFORUM include Antigua and Barbuda, The Bahamas, Barbados, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, Suriname and Trinidad and Tobago. 

The assistant secretary for external affairs in BVI Premier’s Office Christopher said in her comments: “We welcome that associate membership is open to the BVI. This status would give us a more meaningful status in CARIFORUM whereby we can participate in the Caribbean’s policy dialogue with the EU and regional coordination. At the moment we remain an observer.”

BVI and EU co-chair Meeting to Discuss EU Tax List Issues

BVI and European Commission co-chaired the meeting of financial services partnership working party which was held in Belgium between the EU and a number of Overseas Countries and Territories. During the meeting, the EU list of non-cooperative jurisdictions for tax purposes was discussed. From OCT jurisdictions, there were representatives of Aruba, British Virgin Islands, Cayman Islands, Turks and Caicos Islands and some others, from EU, there were the officials from the Directorate General for Tax and Customs Union and Directorate General for International Development and Cooperation. 

Beside the listing process and ongoing procedures, the participants of the meeting also discussed beneficial ownership developments in the EU and OCTs and EU approach to taxation in the digital economy sector. 

BVI London Office director and UK and EU representative Benito Wheatley co-chaired the meeting on behalf of the BVI, and currently is co-chairing the OCT/EU financial services partnership working party. He said in his comments: “It is critical that the EU and OCTs maintain dialogue on tax and other financial services issues to gain a greater understanding of any concerns.”

BVI Gets New Status on EU Tax list

On March 13, 2018, the European Union has made changes to the list of non-cooperative tax jurisdictions: three countries were removed and further three were added to it. Bahrain, the Marshall Islands and Saint Lucia were said by the EU Council to have made commitments to answer the EU’s concerns about them, and the Bahamas, Saint Kitts and Nevis, and the US Virgin Islands were, in their turn, included in the list.

The British Virgin Islands, along with Anguilla, Antigua and Barbuda, and Dominica were added to annex II of the list, which includes territories that have made commitments to reform their tax policies. These jurisdictions are subject to close monitoring. The original list comprised 17 jurisdictions and was announced on December 5, 2017.

BVI Discussed Freedom of Movement to EU with UK Representatives

Representatives of the UK Home Office and UK Department for Exiting the EU held a meeting with the BVI delegation to discuss freedom of movement to the European Union for Overseas Territories citizens at a Brexit technical roundtable in London held on May 9. During the roundtable, BVI London Office director and EU representative Benito Wheatley emphasised the importance of visa-free travel to the EU for the BVI business persons and stated that the jurisdiction is the headquarters of the Commercial Court Division of the Eastern Caribbean Supreme Court and home to a new International Arbitration Centre.

Previously, the BVI delegation took part in a Brexit technical roundtable on fisheries and agriculture in April this year, and is planning to attend upcoming technical roundtables on European Union funding, trade, and financial services. 

The BVI Premier Dr Orlando Smith mandated Brexit Task Force chaired by permanent secretary in the Premier's Office, Brodrick Penn, to prepare a White Paper on the opportunities and risks posed to BVI by Brexit, ahead of the second UK-OT Joint Ministerial Council on Brexit Negotiations on July 12.

BVI Business Management Consultants May Participate in EU-initiated Projects

Business consultants in the British Virgin Islands, as well as in other Overseas Territories included into the Chapter of the Caribbean Institute of Certified Management Consultants (CICMC), will receive the opportunity to bid on regional and international projects and initiatives under the EU portfolio, after being certified and trained. The OCT chapter of CICMC was launched in the BVI on April 6, driven by CICMC-OCT inductee and the chapter’s first president, Marva Titley-Smith.

BVI Premier and minister of finance, Dr Orlando Smith, said that the initiative is consistent with government's agenda to support and strengthen the small business community in the jurisdiction, and commented: “We will continue to do all that we can to provide an enabling environment for small business to develop and thrive, thereby building a strong economy for the territory.” 

Along with the BVI business consultants, the OCT Chapter of CICMC is open to consultants in Anguilla, Aruba, Bonaire, Cayman Islands, Curacao, Montserrat, Saba, St Barthelme, St Eustatius, St Maarten, the Turks and Caicos Islands.

BVI EU Representative Takes Part in Discussions with CARIFORUM and ACP

In the mid of March, BVI EU representative Benito Wheatley had a meeting in Brussels, Belgium with secretary general of the African, Caribbean and Pacific (ACP) group of countries, to discuss the alternative post-Brexit relationship between the British Virgin Islands and the European Union. Wheatley expressed interest of the BVI in establishing close ties with the organization in the future agreements with the EU.

Also, the BVI EU representative attended CARIFORUM ambassadors meetings where discussed BVI plans to engage with the Caribbean states organization and participate in their future arrangements with the EU. Financial services were emphasized as the main area of immediate cooperation, especially concerning Caribbean jurisdictions' ongoing dialogue with the European Union on international tax cooperation. 

Wheatley's discussions with the ACP group of countries and CARIFORUM are in line with BVI Premier's mandate given to BVI EU representative, to explore different options for jurisdiction's relationship with the organization. The meetings in which Wheatley participated on behalf of the BVI were part of Caribbean Tourism Organization's mission to Brussels to discuss with EU stakeholders the impact of Brexit on the Caribbean.

BVI Hosted Meeting of Winair, Air France and KLM

On January 9, 2017, Winair, Air France and KLM had a joint sales and marketing meeting in the British Virgin Islands, with the purpose to share the latest positive developments between Air France, KLM and Winair which will enhance the market. The companies shared their schedules, traffic patterns and growth of European customers with stakeholders in the BVI.

The participants also discussed the planned codeshare between Winair and KLM and will further enhance connections to the BVI. The code share agreement between Winair and Air France cause the 100% yearly increases of French market growth to the BVI, and the planned codeshare with KLM will unite the route structures of Air France, KLM and Winair and promote better connections to the BVI and other Caribbean countries at a lower price.

Winair (Windward Islands Airways International NV) is a government-owned regional airline, providing air transportation in the Caribbean region, having interline partners with 11 airlines from North and South America, Europe and the Caribbean, and a codeshare agreement with Air France.

BVI on the List of Countries for AEOI Consultations with Switzerland

British Virgin Islands is included in the list of the countries with which the Swiss Federal Department of Finance has launched a consultation on the introduction of the automatic exchange of information in tax matters (AEOI). The consultation will be held until March 15, 2017, and the AEOI for the listed countries is expected to enter into force on January 1, 2018, with first exchanges to start in 2019.

According to the Federal Department of Finance, the introduction of the AEOI with the new countries will confirm international commitment of Switzerland to implement the AEOI standards. 

The FDF said that these countries, which along with the BVI include Andorra, Argentina, Barbados, Bermuda, Brazil, the Cayman Islands, Chile, India, Israel, Mauritius, Mexico, Monaco, New Zealand, the Seychelles, and some others, adhere to the principle of speciality and implement appropriate measures to safeguard the confidentiality of the data exchanged.

In 2017, Switzerland will introduce the AEOI with EU member states, Australia, Iceland, Norway, Japan, Canada, South Korea, Jersey, Guernsey, and the Isle of Man.

BVI Takes Part in a Study on Diversification of Caribbean OCTs

The British Virgin Islands is taking part in a regional study on diversification of the Caribbean countries, launched in November last year by the EU-funded Caribbean Overseas Small and Medium Enterprises Programme. The purpose of the study is to determine if the economies of the Caribbean Overseas Territories need diversification, and give recommendations how to do it.

BVI Premier and minister of finance, Dr Orlando Smith, noted that the study is in line with BVI government’s economic strategy to diversify the long term sustainability of current and emerging sectors of the economy.
 
The main objective of Caribbean Overseas Small and Medium Enterprises i(COSME) s improving the competitiveness of small and medium enterprises in the British, Dutch and French OCTs by facilitating enhanced business enabling environment. Among the beneficiary countries there are BVI, Anguilla, Cayman Islands, Montserrat, and the Turks and Caicos Islands.

BVI Government Representatives Meeting EU Officials

According to the statement issued by the BVI Government, its London Office Director and EU representative recently co-chaired an EU/OCT Financial Services Partnership Working Party meeting in Brussels, Belgium, having discussed the issue why earlier this year BVI was placed on the list of non-cooperative tax jurisdictions.

The Director of Policy, Research and Statistics at the BVI FSC Cherno Jallow and other OCT technical experts had the meeting on the issue with European Commission officials from the Directorate General for Taxation and Customs Union, talking about the European Union position on blacklisting of Overseas Territories. By words of Jallow, the sides agreed that the inclusion of countries on the list had to be further considered in connection with co-operation between the EU and OCTs in the sphere of financial services.

Other issued discussed during the meeting were operation of the platform for tax good governance, re-launching of the common consolidated corporate tax base (CCCTB), Country-by-Country reporting and other EU initiatives.

The BVI FSC representative also had a meeting with the UK person on the European Parliament, Daniel Dalton, to brief him on the “high international standards met by the BVI on tax and transparency during the meeting”.

Caribbean Community Issues Statement on Tax Haven Blacklisting

Following the European Commission’s decision to put some Caribbean jurisdictions – members of the Caribbean Community – on the “black list” as non-willing to co-operate with EU countries in the area of tax law enforcement, CARICOM issued a statement strongly objecting this, and emphasizing efforts of CARICOM member states to comply with regulatory measures.

BVI is among the “blacklisted” countries, along with Anguilla, Antigua and Barbuda, The Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Grenada, Montserrat, St Kitts and Nevis, St Vincent and the Grenadines and the Turks and Caicos Islands. The criteria for considering the countries as non-cooperative included governance (transparency and exchange of information) and fair tax competition.

It is remarkable that in a formal statement issued by the OECD Global Forum this month, it has disassociated itself with the decision of the European Commission, although their own assessment was relevant for the purposes of determining country’s cooperation in tax matters. From the Global Forum statement, it became clear that the EU point of view does not correspond with that of the Global Forum, which, in its turn, is planning to extend support to its member countries put on the black list.

British Virgin Islands Host EU Meetings

BVI will host three high level European Union meetings, which are scheduled this week with participation of senior EU officials from UK, France, Denmark and Netherlands, as well as OT’s political leaders. By words of Premier and Minister of Finance, Hon. Dr. D. Orlando Smith, the meetings are the culmination of hard work over the past months. The Premier will co-chair with the European Commission a Caribbean Regional Conference for OTs that will focus on how the territories can work together to achieve sustainable development.

Hon. Orlando Smith will also be the chairman of the OCTA Ministerial Conference where the heads of Government and political leaders will participate in a number of discussions; he will also be the participant of the 13th OCT-EU Forum which is the main vehicle for political dialogue between the European Union and the Overseas Territories. An important part of the talks will be the future of the Overseas Countries and Territories in the European Union.

The British Virgin Islands also manage the project for small and medium sized enterprises on behalf of the Caribbean OTs, which is funded by European Union, and is expected to benefit local small business sector.

BVI Premier Visited Brussels to Discuss Partnership

In the beginning of April, British Virgin Islands Premier and Minister of Finance, Dr Orlando Smith, made an official visit to Brussels, during which he had meetings with European Union (EU) officials and discussed partnerships and programs for the benefit of the 26 Overseas Countries and Territories (OCTs) associated with EU. At the European Commission, the Premier discussed plans for the 13th OCT-EU Forum which will be held in the British Virgin Islands. Also, BVI Premier met with United Kingdom Member of European Parliament (MEP) Ashley Fox.

On behalf of the Premier, BVI London Office director Kedrick Malone and deputy director Benito Wheatley met the secretary general of the African, Caribbean and Pacific Group of Countries (ACP) Secretariat, and discussed economic cooperation and programming between the OCTs and ACP countries in the regions where they are located.

Dr Orlando Smith launched himself as chairman of the Overseas Countries and Territories Association (OCTA). He was introduced to OCTA partners, among them representatives of the Greek Presidency of EU, Caribbean ambassadors to the EU, the director of the OCT Task Force at the European Commission, representatives of an environmental non-governmental organisation (NGO) and representatives of the OCTA Executive Committee (ExCo).

MOU with ESMA Signed by 25 European Securities Regulators

According to the press release issued by the British Virgin Islands Financial Services Commission, twenty-five European securities regulators signed Memorandum of Understanding (MOU) concerning consultation, cooperation and the exchange of information related to the supervision of Alternative Investment Fund Managers with the BVI FSC.

The MOU signed in May 2013 was negotiated and approved by European Securities and Markets Authority (ESMA), and provided for the supervision of alternative investment funds, including hedge funds, private equity funds and real estate funds. The signings ensure that the BVI Mutual Fund Industry will be able to market its products within the European Union.

It was stated in the press release that the Commission had been negotiating with ESMA since April 2012, and through its participation in the process, is confident that the MOU represents a balanced approach, and is pleased to have executed the agreements which demonstrate the recognition and importance of BVI funds in the global industry.