So the below means BVI is no longer an offshore jurisdictions which is worth the money and the run right?
Now I was reading the same about Panama, Switzerland, Singapore, Luxembourg and many other countries, but it looks like it is only 7% of all countries which have signed a TIEA - when will all the other countries follow or will they ?
The British Virgin Islands have double tax treaties with the UK, Japan and Switzerland; in the last two cases, this means just that the UK's treaty with the countries concerned has been extended to the BVI. Prior to the introduction of the BVIBC Act, the benefit of these Double Tax Treaties applied only to BVI resident companies, which had to take the form of Companies Act (Cap. 285) Companies (see Forms of Company). Since the overwhelming majority of BVI companies took the form of the International Business Company, the International Limited Partnership or the Trust, all of which were exempt from taxes and fell outside the ambit of the Double Tax Treaties, offshore investors were not in a position to use the BVI Double Tax Treaties.
Since the OECD recommenced its offshore tax transparency crusade with the publication of its black/grey/white list, the BVI has entered into numerous Tax and Information Exchange Agreements to avoid being branded as an uncooperative tax haven (see below). In addition, an amendment to the tax agreement with the UK was signed in 2008, and double tax agreements with seven Nordic countries were signed in 2009.
British Virgin Islands Other International Agreements
The British Virgin Islands has a Mutual Legal Assistance Treaty with the USA. Following pressure in early 2000 from the OECD and the Financial Stability Forum of the G7, the BVI announced in June that it would include within the parameters of the treaty access to information relating to criminal tax investigations and that it would eliminate the requirement for dual criminality. This would be accompanied by the introduction of Compulsory Powers Legislation to provide for access to information within the BVI.
In April, 2002, the British Virgin Islands Government announced that an agreement had been reached with the OECD without compromising the BVI's principle of 'even keel' across all nations.
Robert Mathavious, Managing Director of the BVI Financial Services Commission, commented: "We are pleased that an agreement with the OECD can be reached without compromising our established views. We are confident that working with the OECD will enable us to retain our position as a leading financial centre. We are pleased to be accepted, and invited to participate, as a full and equal partner in the OECD forum of activities."
At the same time, the BVI announced the signing of a new Tax Information Exchange Agreement with the United States of America.
Speaking after the signing of the agreement, BVI Governor, then Frank Savage, observed that allowing the US Internal Revenue Service to pierce banking secrecy in cases of tax evasion and money laundering, clearly demonstrated that the country had been working "to increase the transparency of our systems and reduce the potential for abuse."
Then US Treasury Secretary, Paul O'Neill said that the Bush administration welcomed the agreement with the BVI, explaining that: "We have an obligation to enforce our tax laws because failing to do so undermines the confidence of honest taxpayers of our system. One of the keys to enforcement of our tax laws is access to needed information."
In 2003 the BVI set up a Financial Investigation Agency. This agency functions as a specialist investigative law enforcement arm of government. Its primary focus will be to investigate the BVI financial services industry and support the BVI mutual legal assistant regimes.
The Agency was officially launched in 2004. Highlighting the agency’s launch as an example of the territory’s dedication to upholding international initiatives to combat financial crime, then Chief Minister Orlando Smith commented: “This commitment is the foundation of our entire financial industry and, I can assure you, it will always be a top priority for this Government”.
The FIA took over the role formerly carried out by the Royal Virgin Islands Police Force.
In January, 2006, a prospective Tax Information Exchange Agreement (TIEA) between Australia and the British Virgin Islands was reportedly derailed at the last minute because the Caribbean jurisdiction was holding out for special concessions from Canberra as an inducement to sign the agreement.
In July 2006, Chief Minister Orlando Smith revealed that the territory's government was considering its future participation in the Caribbean Single Market Economy (CSME).
Although the BVI is not taking part in the single market process, Dr Smith stated that the government will continue to examine the pros and cons of participation, particularly from the trade angle.
“We are actively engaged in following the process to see clearly what the disadvantages and benefits could be whether we are in or out of that process,” the Chief Minister explained at a media briefing following the recent meeting of Caricom heads of government, and the 43rd meeting of the Organisation of Eastern Caribbean States (OECS). “This is because we are speaking about things like trade relationships, which could be important in the future,” he added.
In August 2007, it emerged that the the British Virgin Islands Financial Services Commission and the Jersey Financial Services Commission had signed a memorandum of understanding designed to further co-operation between the two regulatory bodies.
The MoU establishes a formal basis for co-operation, including the exchange of information and investigative assistance. Such collaboration should help to protect investors and depositors and to promote the integrity of financial services markets in Jersey and the British Virgin Islands.
John Harris, Director General of the Jersey FSC, said: “I am delighted that we have been able to conclude formal arrangements for sharing regulatory information with the British Virgin Islands Financial Services Commission. A number of finance industry firms have a presence in both jurisdictions and this Memorandum of Understanding will ensure that where regulatory information needs to be exchanged it can be done in a rapid and efficient manner.”
Robert Mathavious, Managing Director and Chief Executive Officer of the BVI FSC, added: “As leading international finance centres, Jersey and the BVI have cooperated formally and informally on regulatory matters over a number of years. I am delighted that this Memorandum of Understanding will enable us to work more closely together to the benefit of both of our regulatory regimes. For the BVI FSC, the Memorandum is a further sign of our commitment towards effective international cooperation that builds our capacity as a world-class jurisdiction.
He added: “The business communities in the BVI and Jersey already work closely together in many ways. The Memorandum of Understanding will provide them with further assurance of being able to rely on high quality regulation in both jurisdictions.”
In October 2008 Australian Assistant Treasurer Chris Bowen and the Premier of the BVI Ralph O’Neal announced the signing of a Tax Information Exchange Agreement between Australia and the BVI.
The TIEA provides for full exchange of information on request in both criminal and civil tax matters and builds upon legislation in both jurisdictions, which already provides for mutual legal assistance in criminal matters.
Under the terms of the TIEA, Australia and the BVI have agreed not to apply prejudicial or restrictive measures based on harmful tax practices to residents or nationals while the TIEA is in force and effective. Further, Australia will remove any governmental references to the BVI as a ‘tax haven’ and will list the BVI as an ‘information exchange country’ in the Taxation Administration Regulations 1976. This will provide residents of the BVI with access to reduced withholding tax rates on distributions of certain income they may receive from Australian managed investment trusts.
In addition to the TIEA, Australia and the BVI have signed an agreement for the allocation of taxing rights with respect to certain income of individuals, which will provide benefits to Australian and BVI residents. Australia and the BVI have also agreed to enter into discussions, when appropriate, to foster further co-operation in areas of mutual interest.
In response to the signing of the TIEA, Mr Bowen said:
“The TIEA between Australia and the BVI demonstrates both jurisdictions’ commitment to international co-operation and effective exchange of information. The BVI’s co-operation in fostering these international standards of transparency and exchange of information enhances its reputation as a globally integrated and responsible financial centre.”
“The TIEA also complements the strong commitment of the governments of Australia and the BVI to international standards on anti-money laundering and counter-terrorism financing, as set by the Financial Action Task Force. The Australian government particularly welcomes the BVI’s admission as a full member to the International Organisation of Securities Commissions, where it joins more than 100 jurisdictions with recognised high standards of regulation and compliance.”
Mr O’Neal said:
"In addition to the TIEA, we have also negotiated a further package of measures that will bring benefits to the BVI, including technical assistance, non-discriminatory tax treatment and an agreement covering the allocation of taxing rights for students and government employees. The BVI looks forward to an ongoing cooperative relationship with Australia."
Residents of ‘information exchange countries’ are subject to withholding tax at the following rates: 22.5% for fund payments made between 1 July 2008 and 30 June 2009; 15% (final) for fund payments made between 1 July 2009 and 30 June 2010; and 7.5% (final) for fund payments made from 1 July 2010.
For the 2008-09 income year, as an interim measure, investors resident in information exchange countries are eligible to claim a deduction for expenses relating to fund payments. The net amount will be subject to tax at 22.5%. Residents of other countries are subject to a final withholding tax of 30%.
Just days after it sealed the arrangement with the government of Australia, the BVI signed a TIEA with the UK.
The BVI/UK TIEA provides for exchange of information on request relating to a specific criminal or civil tax matter under investigation. This agreement builds upon legislation in both jurisdictions which already provides for mutual legal assistance in criminal matters.
In addition to the TIEA, BVI and the United Kingdom have signed an agreement for the avoidance of double taxation with respect to taxes on income, which will provide benefits to BVI and UK residents. Both Governments have also stated that neither party has any intention of introducing any discriminatory, prejudicial or restrictive measures based on harmful tax practices while the TIEA is in force.
In response to the signing of the TIEA, O’Neal said: “The conclusion of this TIEA demonstrates the commitment of both the BVI and the United Kingdom governments to international co-operation in transparency and exchange of information. We welcome HM Treasury’s acknowledgement of BVI's leadership role in global tax standards and our reputation for good governance in financial matters. As is recognised in the TIEA, both governments have long been active in international efforts in the fight against financial and other crimes. The BVI will continue to foster and develop international best practice in all areas of financial regulation.”
He added: “In addition to the TIEA, we have also successfully negotiated a declaration of intent for non-discriminatory tax treatment and a double taxation agreement covering taxes on income for pensioners, students and government employees.”
The tax agreements between the BVI and the UK will enter into force as soon as both governments have completed the legislative procedures needed to give them effect.
In May 2009 British Virgin Islands government announced the signing of bilateral tax information exchange agreements with the six Nordic countries, which include the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden at the Icelandic Embassy in Copenhagen, Denmark, on May 18.
The agreements were signed by BVI Minister of Health and Social Development Dancia Penn and senior officials from the Nordic group. The OECD model agreements will provide for the exchange of information in tax matters in both civil tax matters and where there is concrete proof of the perpetration of a tax crime.
At the ceremony Penn also concluded agreements for the avoidance of double taxation with the Nordic group on behalf of the British Virgin Islands.
In June 2009 BVI leader Ralph O’Neal announced the conclusion of a Tax Information Exchange Agreement with France. The signing of the agreement brings the British Virgin Island’s tally of such agreements to eleven, one short of being deemed ‘fully-compliant’ with the OECD’s principles of transparency and information exchange.
The agreement will provide the respective countries’ tax authorities with information on tax matters upon request in cases where there is sufficient concrete evidence of the perpetration of a tax crime. It was signed by O’Neal and French Budget Minister Eric Woerth, who commented that the signing of the agreement was “further evidence of the British Virgin Islands’ willingness to implement the OECD principles of transparency and information exchange,” adding that it would have “a favourable impact on the British Virgin Islands in relation to the application of specific French tax provisions, based on an effective exchange of information criterion.”
Speaking at a press conference before the signing O’Neal commented on the BVI's intention to be removed from the OECD’s grey list:
“Our 12th TIEA is in the very near future. Although that would reach the number suggested by the OECD and the G-20, we do not intend to stop there; we intend to continue to negotiate with other countries like Germany, Austria, Brazil, Mexico, Argentina, Canada and as many countries as we can make contact with and are willing to negotiate with the [british Virgin Islands].”
Now I was reading the same about Panama, Switzerland, Singapore, Luxembourg and many other countries, but it looks like it is only 7% of all countries which have signed a TIEA - when will all the other countries follow or will they ?
The British Virgin Islands have double tax treaties with the UK, Japan and Switzerland; in the last two cases, this means just that the UK's treaty with the countries concerned has been extended to the BVI. Prior to the introduction of the BVIBC Act, the benefit of these Double Tax Treaties applied only to BVI resident companies, which had to take the form of Companies Act (Cap. 285) Companies (see Forms of Company). Since the overwhelming majority of BVI companies took the form of the International Business Company, the International Limited Partnership or the Trust, all of which were exempt from taxes and fell outside the ambit of the Double Tax Treaties, offshore investors were not in a position to use the BVI Double Tax Treaties.
Since the OECD recommenced its offshore tax transparency crusade with the publication of its black/grey/white list, the BVI has entered into numerous Tax and Information Exchange Agreements to avoid being branded as an uncooperative tax haven (see below). In addition, an amendment to the tax agreement with the UK was signed in 2008, and double tax agreements with seven Nordic countries were signed in 2009.
British Virgin Islands Other International Agreements
The British Virgin Islands has a Mutual Legal Assistance Treaty with the USA. Following pressure in early 2000 from the OECD and the Financial Stability Forum of the G7, the BVI announced in June that it would include within the parameters of the treaty access to information relating to criminal tax investigations and that it would eliminate the requirement for dual criminality. This would be accompanied by the introduction of Compulsory Powers Legislation to provide for access to information within the BVI.
In April, 2002, the British Virgin Islands Government announced that an agreement had been reached with the OECD without compromising the BVI's principle of 'even keel' across all nations.
Robert Mathavious, Managing Director of the BVI Financial Services Commission, commented: "We are pleased that an agreement with the OECD can be reached without compromising our established views. We are confident that working with the OECD will enable us to retain our position as a leading financial centre. We are pleased to be accepted, and invited to participate, as a full and equal partner in the OECD forum of activities."
At the same time, the BVI announced the signing of a new Tax Information Exchange Agreement with the United States of America.
Speaking after the signing of the agreement, BVI Governor, then Frank Savage, observed that allowing the US Internal Revenue Service to pierce banking secrecy in cases of tax evasion and money laundering, clearly demonstrated that the country had been working "to increase the transparency of our systems and reduce the potential for abuse."
Then US Treasury Secretary, Paul O'Neill said that the Bush administration welcomed the agreement with the BVI, explaining that: "We have an obligation to enforce our tax laws because failing to do so undermines the confidence of honest taxpayers of our system. One of the keys to enforcement of our tax laws is access to needed information."
In 2003 the BVI set up a Financial Investigation Agency. This agency functions as a specialist investigative law enforcement arm of government. Its primary focus will be to investigate the BVI financial services industry and support the BVI mutual legal assistant regimes.
The Agency was officially launched in 2004. Highlighting the agency’s launch as an example of the territory’s dedication to upholding international initiatives to combat financial crime, then Chief Minister Orlando Smith commented: “This commitment is the foundation of our entire financial industry and, I can assure you, it will always be a top priority for this Government”.
The FIA took over the role formerly carried out by the Royal Virgin Islands Police Force.
In January, 2006, a prospective Tax Information Exchange Agreement (TIEA) between Australia and the British Virgin Islands was reportedly derailed at the last minute because the Caribbean jurisdiction was holding out for special concessions from Canberra as an inducement to sign the agreement.
In July 2006, Chief Minister Orlando Smith revealed that the territory's government was considering its future participation in the Caribbean Single Market Economy (CSME).
Although the BVI is not taking part in the single market process, Dr Smith stated that the government will continue to examine the pros and cons of participation, particularly from the trade angle.
“We are actively engaged in following the process to see clearly what the disadvantages and benefits could be whether we are in or out of that process,” the Chief Minister explained at a media briefing following the recent meeting of Caricom heads of government, and the 43rd meeting of the Organisation of Eastern Caribbean States (OECS). “This is because we are speaking about things like trade relationships, which could be important in the future,” he added.
In August 2007, it emerged that the the British Virgin Islands Financial Services Commission and the Jersey Financial Services Commission had signed a memorandum of understanding designed to further co-operation between the two regulatory bodies.
The MoU establishes a formal basis for co-operation, including the exchange of information and investigative assistance. Such collaboration should help to protect investors and depositors and to promote the integrity of financial services markets in Jersey and the British Virgin Islands.
John Harris, Director General of the Jersey FSC, said: “I am delighted that we have been able to conclude formal arrangements for sharing regulatory information with the British Virgin Islands Financial Services Commission. A number of finance industry firms have a presence in both jurisdictions and this Memorandum of Understanding will ensure that where regulatory information needs to be exchanged it can be done in a rapid and efficient manner.”
Robert Mathavious, Managing Director and Chief Executive Officer of the BVI FSC, added: “As leading international finance centres, Jersey and the BVI have cooperated formally and informally on regulatory matters over a number of years. I am delighted that this Memorandum of Understanding will enable us to work more closely together to the benefit of both of our regulatory regimes. For the BVI FSC, the Memorandum is a further sign of our commitment towards effective international cooperation that builds our capacity as a world-class jurisdiction.
He added: “The business communities in the BVI and Jersey already work closely together in many ways. The Memorandum of Understanding will provide them with further assurance of being able to rely on high quality regulation in both jurisdictions.”
In October 2008 Australian Assistant Treasurer Chris Bowen and the Premier of the BVI Ralph O’Neal announced the signing of a Tax Information Exchange Agreement between Australia and the BVI.
The TIEA provides for full exchange of information on request in both criminal and civil tax matters and builds upon legislation in both jurisdictions, which already provides for mutual legal assistance in criminal matters.
Under the terms of the TIEA, Australia and the BVI have agreed not to apply prejudicial or restrictive measures based on harmful tax practices to residents or nationals while the TIEA is in force and effective. Further, Australia will remove any governmental references to the BVI as a ‘tax haven’ and will list the BVI as an ‘information exchange country’ in the Taxation Administration Regulations 1976. This will provide residents of the BVI with access to reduced withholding tax rates on distributions of certain income they may receive from Australian managed investment trusts.
In addition to the TIEA, Australia and the BVI have signed an agreement for the allocation of taxing rights with respect to certain income of individuals, which will provide benefits to Australian and BVI residents. Australia and the BVI have also agreed to enter into discussions, when appropriate, to foster further co-operation in areas of mutual interest.
In response to the signing of the TIEA, Mr Bowen said:
“The TIEA between Australia and the BVI demonstrates both jurisdictions’ commitment to international co-operation and effective exchange of information. The BVI’s co-operation in fostering these international standards of transparency and exchange of information enhances its reputation as a globally integrated and responsible financial centre.”
“The TIEA also complements the strong commitment of the governments of Australia and the BVI to international standards on anti-money laundering and counter-terrorism financing, as set by the Financial Action Task Force. The Australian government particularly welcomes the BVI’s admission as a full member to the International Organisation of Securities Commissions, where it joins more than 100 jurisdictions with recognised high standards of regulation and compliance.”
Mr O’Neal said:
"In addition to the TIEA, we have also negotiated a further package of measures that will bring benefits to the BVI, including technical assistance, non-discriminatory tax treatment and an agreement covering the allocation of taxing rights for students and government employees. The BVI looks forward to an ongoing cooperative relationship with Australia."
Residents of ‘information exchange countries’ are subject to withholding tax at the following rates: 22.5% for fund payments made between 1 July 2008 and 30 June 2009; 15% (final) for fund payments made between 1 July 2009 and 30 June 2010; and 7.5% (final) for fund payments made from 1 July 2010.
For the 2008-09 income year, as an interim measure, investors resident in information exchange countries are eligible to claim a deduction for expenses relating to fund payments. The net amount will be subject to tax at 22.5%. Residents of other countries are subject to a final withholding tax of 30%.
Just days after it sealed the arrangement with the government of Australia, the BVI signed a TIEA with the UK.
The BVI/UK TIEA provides for exchange of information on request relating to a specific criminal or civil tax matter under investigation. This agreement builds upon legislation in both jurisdictions which already provides for mutual legal assistance in criminal matters.
In addition to the TIEA, BVI and the United Kingdom have signed an agreement for the avoidance of double taxation with respect to taxes on income, which will provide benefits to BVI and UK residents. Both Governments have also stated that neither party has any intention of introducing any discriminatory, prejudicial or restrictive measures based on harmful tax practices while the TIEA is in force.
In response to the signing of the TIEA, O’Neal said: “The conclusion of this TIEA demonstrates the commitment of both the BVI and the United Kingdom governments to international co-operation in transparency and exchange of information. We welcome HM Treasury’s acknowledgement of BVI's leadership role in global tax standards and our reputation for good governance in financial matters. As is recognised in the TIEA, both governments have long been active in international efforts in the fight against financial and other crimes. The BVI will continue to foster and develop international best practice in all areas of financial regulation.”
He added: “In addition to the TIEA, we have also successfully negotiated a declaration of intent for non-discriminatory tax treatment and a double taxation agreement covering taxes on income for pensioners, students and government employees.”
The tax agreements between the BVI and the UK will enter into force as soon as both governments have completed the legislative procedures needed to give them effect.
In May 2009 British Virgin Islands government announced the signing of bilateral tax information exchange agreements with the six Nordic countries, which include the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden at the Icelandic Embassy in Copenhagen, Denmark, on May 18.
The agreements were signed by BVI Minister of Health and Social Development Dancia Penn and senior officials from the Nordic group. The OECD model agreements will provide for the exchange of information in tax matters in both civil tax matters and where there is concrete proof of the perpetration of a tax crime.
At the ceremony Penn also concluded agreements for the avoidance of double taxation with the Nordic group on behalf of the British Virgin Islands.
In June 2009 BVI leader Ralph O’Neal announced the conclusion of a Tax Information Exchange Agreement with France. The signing of the agreement brings the British Virgin Island’s tally of such agreements to eleven, one short of being deemed ‘fully-compliant’ with the OECD’s principles of transparency and information exchange.
The agreement will provide the respective countries’ tax authorities with information on tax matters upon request in cases where there is sufficient concrete evidence of the perpetration of a tax crime. It was signed by O’Neal and French Budget Minister Eric Woerth, who commented that the signing of the agreement was “further evidence of the British Virgin Islands’ willingness to implement the OECD principles of transparency and information exchange,” adding that it would have “a favourable impact on the British Virgin Islands in relation to the application of specific French tax provisions, based on an effective exchange of information criterion.”
Speaking at a press conference before the signing O’Neal commented on the BVI's intention to be removed from the OECD’s grey list:
“Our 12th TIEA is in the very near future. Although that would reach the number suggested by the OECD and the G-20, we do not intend to stop there; we intend to continue to negotiate with other countries like Germany, Austria, Brazil, Mexico, Argentina, Canada and as many countries as we can make contact with and are willing to negotiate with the [british Virgin Islands].”
