NDP signed only 3 TIEAs compared to VIP’s 22
The industry, which is responsible for well over 50% of the Territory’s income, is under constant attack from the international community particularly from Europe and the United States of America.
Within the last year alone there have been numerous articles labeling the Virgin Islands (VI) as a tax haven, and claiming that the jurisdiction is hiding dirty money and sheltering tax cheats.
Now and again the public will hear a routine press release from the Minister of Finance Dr. Smith or the Financial Secretary Mr Neil M. Smith with the usual talking points- that the Virgin Islands is not a tax haven [which we agree it’s not] but a well regulated financial jurisdiction.
However, beyond the talking points, many have lost faith in the current Administration’s ability to protect and seriously defend the sector and the Virgin Islands’ good name on the international stage.
VIP vs NDP in protecting the financial services sector
Many have argued that the Virgin Islands Party (VIP) Government of Ralph T. O’Neal, OBE did more and a better job to protect the sector. One trust company manager, who did not wish for her name to be used, told this news site in an exclusive interview that “there have been a major drop in company registration, as the many attacks by the international community, particularly newspapers in the United Kingdom, is having an effect and the government needs to do some major work to keep our integrity and good name in tact”.
The manager did admit that the VI is a good place to do off shore business.
Two months ago France blacklisted the Virgin Islands for not providing information requested.
Premier Smith has disclosed last month that the VI has now satisfied the requests from France, however, as of today, the Territory still remains on France’s off shore jurisdiction blacklist.
While industry experts have told us that there have been a drop in the off shore business in the VI, it remains unclear if this is directly related to the recent attacks on the sector.
Another resident, this time from Virgin Gorda who said her name was Ms. Vanterpool and lived in the Valley but did not wish to give her first name, told this news site that “if you did not know better you will think that the NDP was better to deal with this off shore thing as they seem to be the bright boys, but the facts are different and we all should be concerned that we might lose this industry so we better learn to fish and farm,” the resident said in an interview.
Just last month, the Global Forum on Transparency and Exchange of Information for Tax Purposes in its Peer Review Report found the Territory to be non-compliant, another blow to the sector and embarrassment for the Virgin Islands’ image and integrity to comply.
Another issue many have pointed to as the failure by the ruling Government to vigorously protect the sector is the signing of Tax Information Exchange Agreements (TIEA).
In the four years [2007-2011] of the VIP Administration they signed some 22 TIEAs and by its two year mark in office had signed some 15 of the 22.
NDP 3 TIEA, VIP 22 TIEA! Who can best protect the sector?
The National Democratic Party (NDP) Government at its two year mark has only signed 3 TIEAs with the third one being signed just a few days ago with the Government of Poland. The lack of signing of these TIEAs by the NDP Administration is indeed compelling as the international community regards the signing of these agreements as a serious signal of commitment to keeping the jurisdiction clear in accordance with internationally agreed standards.
Commenting on the signing of only his third TIEA in two years, Premier Smith told the Government Information Services that, “The agreement signed with Poland today shows the BVI’s continued commitment to implementing standards set by the Global Forum on Exchange of Information and to assist competent authorities and TIEA partners in making requests for information.”
Foreign Accounts Tax Compliance Act (FATCA)
Another challenge for the financial services sector is the now to be enforced Foreign Accounts Tax Compliance Act (FATCA)- a United States of America Law. While this Act has been around for a long time and appears to have global reach, recently the Virgin Islands under the Dr. Smith Administration agreed with the United States Government to enforce it on the Territory come next year.
Many in the industry have predicted that this will also have a negative effect on the sector especially in the captive insurance area where well over 90% of these companies are American.
The primary goal of the legislation is to identify assets held and income earned by U.S. citizens from offshore sources to ensure that the relevant taxes have been assessed and paid into the US Treasury.
The burden of implementation and compliance with FATCA will likely fall on the investment Managers, Directors and Administrators of offshore American businesses operating in the Territory, with the VI Government assisting in giving information when requested from the United States Government.
The information reached also includes individual American citizens with bank accounts and assets in the VI.
It remains unclear what are the long and short term impacts of the FATCA enforcement and the fallout from same as many companies are expected to pull out and return on shore (returning to the USA), as some states are making their laws more friendly to attract the possible return of these companies by lowering taxes and improving on their financial secrecy laws.
While many in the marketing and public relations sector felt that the GIS headline was misleading since it stated; ‘BVI Signs 25th Tax Information Exchange Agreement With Poland’, one not knowing the facts could have easily believed that the NDP Government had reached its 25th mark in the signing of TIEAs.
But the reality is, the NDP has only signed a mere 3 TIEAs after two years in office despite the vicious attack on the sector. The VIP after 4 years signed some 22 TIEAs and was in negotiations with other countries to sign more in their steadfastness to protect the financial services sector. This means the Virgin Islands now has some 25 signed Tax Information Exchange Agreements, which can be branded as “a milestone”, thanks to the hard work and foundation of the O’Neal Administration.
31 Responses to “NDP signed only 3 TIEAs compared to VIP’s 22”
Show me one country, or particularly, one offshore jurisdiction that has NOT signed on to FATCA. They had no choice but to sign it. What makes me laugh, when French black listed us recently you said the Government was incompetent. Failure to sign on to FATCA will mean black listing from USA and the end of business. Additionally USD is our main currency. Stop talking cow $h!t and snap into reality. VIP would've signed the same damn agreement.