Finance

Statement By Premier Wheatley On European Blacklist Status


STATEMENT BY

HONOURABLE DR. NATALIO D. WHEATLEY

PREMIER AND MINISTER OF FINANCE

AT THE FIFTH SITTING OF THE FIRST SESSION

OF THE FIFTH HOUSE OF ASSEMBLY

EUROPEAN BLACKLIST STATUS

TUESDAY, 31ST OCTOBER, 2023

Madam. Speaker, in December 2021, the OECD’s Global Forum launched its peer review of the Virgin Islands concerning the international standard for exchange of information upon request. This peer review covered the period from 2016-2022, a time when these Virgin Islands was facing the devastation to our infrastructure caused by Hurricanes Irma and Maria in 2017 and facing the international crisis caused by the Panama papers which followed closely behind significant regulatory compliance actions imposed by the Financial Services Commission against Mossack Fonseca. While the Peer Review Group (PRG) made attempts to recognise the difficulties faced by the Virgin Islands, specifically regarding the Hurricanes, the combination of these events had a significant negative impact on its exchange of information framework, which resulted in the BVI moving from “Largely Compliant” to “Partially Compliant” at the conclusion of the peer review in November 2022.

Madam Speaker, in 2022, before the conclusion of the peer review report, a number of legislative changes were made to address deficiencies identified during the peer review process. This included amendments to the BVI Business Companies Act and its Regulations. While these amendments were made in 2022, due to practical and administrative reasons, they entered into force on 1 January, 2023. This meant that these important amendments could not be recognised in that report. However, the impact of these amendments on the legal and regulatory framework of the BVI meant that the Territory could be considered for an early supplementary review.

Immediately after the publication of the peer review report in November 2022, the BVI made an application to the Peer Review Group for the grant of a supplementary review. This request could only be considered by the PRG at its meeting that was scheduled for February/March, 2023. A delegation consisting of Jeremiah Frett, Financial Secretary and Latoya James, Director of International Tax Authority travelled to the OECD Headquarters in Paris, France and made an admirable oral presentation to the PRG outlining the reasons why the BVI should have been granted a supplementary review.  Unfortunately, Madam Speaker, this approval came after the Council of the EU meeting in February, 2023.

Madam Speaker by EU standards, a rating less than ‘largely compliant’ is one of the criteria that determines the “EU List of Non-cooperative Jurisdictions for Tax Purposes” (EU List). As such, following a meeting of the Council of the European Union on 14 February 2023, the BVI was added to the EU list of non-cooperative tax jurisdictions (Annex I). In a statement, the EU Council found that the BVI was not sufficiently in compliance with the OECD standard on the exchange of information on request, but noted that this was the first time the BVI had been added to the list.

Madam Speaker, had the approval for a supplementary review been granted before the EU list was published, the BVI would have remained on Annex II, reflecting jurisdictions that have committed to implementing reforms. As expected the EU has recognised the approval of the supplementary review and removed the BVI from Annex I at the Council of European Union meeting on 17 October, 2023.

Madam Speaker, the BVI remains a world-class international financial centre, committed to high international standards on transparency and regulation and offering a premier business-friendly jurisdiction facilitating global investment and trade. We welcome this announcement and we remain committed to meeting international standards. This Government continues to make the necessary arrangements for the supplementary review that will be launched in Q1 of 2024 and recognise the hard work that has been done so far by the key agencies, including the International Tax Authority, Ministry of Finance and the Financial Services Commission in addressing the recommendations made in the November 2022 report. We look forward to the upgrade of our rating in 2024 and ultimately to the BVI also being removed from Annex II.

 

 



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