As published on bvinews.com, Tuesday 15 February, 2022.
Premier Andrew Fahie acknowledged that the government is currently monitoring a developing situation where rumours are circulating that the territory will return to the European Union’s (EU) ‘grey list’ of tax-havens.
The grey list is used for jurisdictions that have not yet complied with all international tax standards but have committed to doing so; usually in a specified time period.
Back in March 2018, the EU had included the BVI in its grey list of cooperative tax jurisdictions. However, the territory was removed from the list and placed on the coveted whitelist in February 2020.
The Virgin Islands had passed the Economic Substance (Companies and Limited Partnership) Act, 2018 and made an amendment to the BVI Securities and Investment Business Act to increase the regulatory oversight of closed-ended investment funds, in response to concerns raised by the EU.
However, an independent online newspaper located in Brussels, Belgium called EUobserver reported that BVI, along with fellow British Overseas Territory Bermuda, Israel and Russia are expected to be added to the grey list based on a draft version of the list.
Speaking to the media on Friday, Fahie said people will be hearing more on this in the coming weeks as the matter is still ongoing.
“We have been doing so much work to ensure that we stay within the boundaries of where we are supposed to be. We do not see sometimes how things are measured especially for small island states. It is what it is, and you will be hearing more about that,” the Premier said.
“We are monitoring if it is so and to see if it has been a leak that it may be so or it may not be so. So, we can’t take chances and make statements unless it is announced in that way. We are doing our work in the background to make sure we get to the bottom of this matter, and we will be reporting to the public accordingly,” Fahie continued.
The EU’s grey list is expected to grow from 15 to 25 jurisdictions and is expected to be adopted by the EU ministers on February 24.
The countries included are deemed by the EU to not have met promises on tax reform. Inclusion on the list provides a public relations headache for the nations, especially the BVI since the financial services sector is one of the main pillars of the territory’s economy.
The grey list is published along with a ‘blacklist’ of the worst offenders that faces EU sanctions. The blacklist is not expected to be changed.
Last year, 676 BVI-registered offshore companies were named in the Pandora Papers — the latest revelation in a line of leaks on the scale of global tax evasion. Panama — the country with the second-highest number of registered companies — is already on the EU blacklist.