British Virgin Islands’ Minister of Finance believes that competition and the dictates of the global tax transparency agenda continue to have a negative impact on the territory’s principal money earner – financial services.
The significance of this activity cannot be overstated as its contribution to government earnings is estimated at 93.7%.
Finance Minister Orlando Smith is right to be concerned because the close of 2013 saw the BVI blacklisted by France amid a storm of controversy about that territory’s ability to effectively fulfil its treaty obligations to France under their 2010 Tax Information Exchange Agreement. More here.
BVI’s competitiors for business – Jersey and Bermuda – were also blacklisted by France but received a much welcomed ‘gift’ as they were removed from the list days before Christmas.
Despite assurances by Finance Minister Smith that France is satisfied with the process it has in place to deal with information requests under the treaty, so far no such indication has been given by France.
As a result, investors with assets in the BVI remain exposed to the application by France of a 75 percent withholding tax.
It is little wonder then that in his January 14, 2014 Budget Speech Minister Smith referred to the territory’s International Tax Authority, which he said has “made significant inroads in the management and fulfilment of the BVI’s international tax obligations.” He went on to say that he expects the unit to produce a “paradigm shift in the manner in which the BVI deals with its international tax obligations.” More here.