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The British Virgin Islands have long been at the forefront of offshore financial services. Sherri Ortiz explains why the territory is also ahead of the game when it comes to regulation
The British Virgin Islands (BVI) is on the ‘white list’ of countries that have implemented substantially the internationally agreed tax standard set by the Organisation for Economic Cooperation and Development (OECD).
The process of reinforcing the jurisdiction’s reputation as a globally integrated international finance centre continues now as much as it did when the BVI signed its first Tax Information Exchange Agreement (TIEA) seven years ago.
The April meeting of the G20 in London established the need for urgency in increasing transparency in tax matters, with the OECD introducing new standards for exchanging information.
The benchmark for the white list was set at 12 TIEAs. The BVI has 15, with advanced discussions with other countries in the pipeline. In fact, all OECD countries have been approached and the BVI expects to conclude more agreements in the coming months.
In the know
Up until six months ago, at the meeting of the G20, TIEAs were not talked about widely or understood. They were in the BVI, which signed its first TIEA with the US in 2002. Further agreements followed with the UK and Australia last year.
The BVI sits alongside the likes of the US, UK, France, Germany and Canada among the group of countries that are also on the white list.
As a responsible jurisdiction the BVI has always understood the need to meet internationally recognised standards. The benefits of being a reputable jurisdiction have become even more apparent in the past 12 months, with international attention focusing on finance centres and the need to move towards greater transparency.
It is clear that the G20 is determined that no jurisdiction will avoid the new standards of regulation and international cooperation. As a country that has always set and adhered to the highest standards of transparency, regulation and cooperation, the BVI was already well-placed to meet and surpass these new requirements set by the OECD. Indeed, it welcomes the new level playing field of OECD standards. The key for the future will be how these standards are implemented and monitored by the international community.
The BVI is proud to have been invited to join the OECD Peer Review Group (PRG), which was formed at the OECD Global Forum on Taxation in Mexico in September 2009. The PRG will be responsible for assessing the implementation of OECD standards in all member jurisdictions of the Global Forum, as well as non-member jurisdictions with finance centres. The assessments will be based on availability of information; appropriate access to the information; and the existence of exchange-of-information mechanisms. The PRG will ensure that there is a monitoring and assessment process that is applied universally to all finance centres.
The current standard of 12 TIEAs will inevitably evolve to a more sophisticated measure of cooperation that will take into account the economic significance of the TIEAs that a jurisdiction has signed in terms of the TIEA partner and the manner in which the TIEAs are implemented. The BVI welcomes these developments and will participate to ensure that standards are judged fairly and consistently across all finance centres.
The BVI has never rested on its laurels and has worked hard to develop its reputation. Although the TIEAs are very much part of that process, the jurisdiction’s reputation is based on foundations beyond these agreements.
Less than a year ago the BVI received a very positive report from the Caribbean Financial Action Task Force on its efforts to combat money laundering and terrorist financing. The BVI was widely praised
for setting up the Financial Services Commission as an autonomous regulatory authority responsible for the regulation, supervision and inspection of all financial services in the BVI.
Earlier this year the Eastern Caribbean Supreme Court (ECSC) established a world-class commercial court based in the BVI.
The court is also expected to hear cases stemming from the 400,000 active incorporated companies registered in the BVI, making it a key litigation centre for offshore lawyers.
Commercial cases from all of the ECSC circuits – Anguilla, Antigua and Barbuda, Grenada, Dominica and the BVI – will be heard at the new Commercial Court.
But the BVI remains ever vigilant. During these uncertain times for global finance, the BVI International Finance Centre is committed to maintaining the jurisdiction’s position as a well-regulated, pre-eminent, progressive jurisdiction for international business services. By leading through example the BVI will continue to state the case that, whatever the size or the location, well-run and transparent international finance centres make a valid contribution to a stable and successful global financial services industry.
Sherri Ortiz is executive director at the BVI International Finance Centre