VI financial service industry at crossroads - resident
During a community meeting at Sea Cows Bay over the weekend, Ray George said many people use the Virgin Islands (VI) as just a “shell jurisdiction” while having the bulk of their businesses in places such as Panama and India.
“The industry is evolving,” he said, “the electronic age makes it a lot easier to do business and also to [manipulate the pricing] in the market… companies are finding now that they can outsource… it’s cheaper to do business elsewhere.”
He suggested that it is not a very simple problem and is something that requires all stakeholders, including the opposition and government to “put their hands together” to solve the problem.
He further expressed that the US could call on its federal reserve to sell bonds while in the VI the key issue is government’s involvement in finding some way of being able to “put pressure on the financial services industry”.
Education is key to competitiveness
Another resident at the community meeting, Mr Dickson Igwe, added his take on the issue by saying, “all over the world right now, the investment banking industry is shrinking… the only way we can overcome that problem is by competition.”
He further said, “I don’t see how we can really do much to stop a business from leaving the BVI and going to Panama or somewhere else if that jurisdiction is cheaper to operate in… it’s a businessman.”
Mr Igwe concluded that it was necessary that Representatives and Politicians should push for the education system to “train our young [persons] to become the best in math and computers and things that would make the BVI much more competitive in that area.”
Additionally, he said politicians should make the local environment attractive to these businesses so that they won’t want to leave country.
“One of the things about the protocols” he observed, “was that it was meant to create an environment that will make the BVI much more effective as a financial jurisdiction.”
Does FATCA spell death for financial services?
George also raised the issue of the recently introduced Foreign Accounts Tax Compliance Act (FATCA) by the United States of America (US) which he expressed will affect the Virgin Islands in a “very hard way.” He also bemoaned the fact that though the arrival of the Act has been mentioned in the news media, there was not much mention of details and its effect on the populace at large.
“I haven’t heard anybody comment on the details of it, yes, it’s been mentioned… but the serious implications that FATCA will have come January 1, 2014 are going to affect green card holders in the BVI, if you’re a green card holder, it’s going to affect where you live and it’s going to affect the industry… it’s going to actually put some of the small persons out of business… because of its owners… the bottom line is, the United States basically… [there are] serious compliance taxes globally.”
To put things in perspective he said, “the rest of the world are going to be cashiers… and [the US] is very serious… they have severe penalties… ”
He expressed that he hasn’t heard much either on the issue from a government standpoint and felt this wasn’t the time to “play games” since the VI was essentially at “crossroads”.
Hon. Julian Fraser RA said afterwards “we know about this thing, we hear about it and we hope it would go away… but it hasn’t been discussed.”
The Third District Representative also expressed that he would venture to bring someone to the community at a future meeting who could shed some further light on the particular issue and enlighten persons.
He added, “…it’s a discussion nonetheless that needs to take place.”
According to the US Internal Revenue Service (IRS) website, FATCA is an important development in their efforts to improve tax compliance involving foreign financial assets and offshore accounts. Under FATCA, it adds, US taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season (2012).
In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by US taxpayers, or held by foreign entities in which US taxpayers hold a substantial ownership interest.
It has been stated in the local press that the VI’s present dependence on tourism and financial services are now at an even greater risk with the enforcement tourists may face given the implementation of FATCA and its demands on financial institutions.
.png)
Follow Us On
25 Responses to “VI financial service industry at crossroads - resident”
And what exactly is that business?
This whole 'financial services industry' is just a glossy, sophisticated sheen covering a simple thing – tax avoidance for people and companies in other countries who don't want to pay their fair share into society.
The 'threat' is that the USA is trying to keep a handle on the money its citizens/companies REALLY have, so it can get the tax its society is due.
People wonder about the deficit being so big in the US. One reason is that many of those people and corporations who should be paying money back into the government coffers to go to health care and social services etc, are hiding their money in our little Road Town offices.
Piracy continues in the Caribbean and just because its done by men in fancy suits, we act like we have a legitimate industry. The more suits we wear and SUVs we drive, the less we want to hear the truth.
Tax evasion and tax avoidance are two different things completely! If you understand some of the tax treaties between some countries which the wealthy hire tax accountants and lawyers to utilize the loop holes is completely legal.
As for "hiding their money in our little Road Town offices"; note that we have a heavy concentration of companies that can open accounts anywhere in the world. Our financial services portfolio is not heavily weighted on banking (i.e. accounts). Caymans on the other hand has huge portion of their industry having offshore accounts.
That's what we do here - we help people/corporations with money to steal from the poor (the taxes due to society that might help educate someone or save a life) to give to the rich (by giving individuals/corporations a place to exist 'legitimately' so they don't have to pay into their mother country's tax system).
All those financial guys with suits and ties in Road Town should be forced, by law, to wear eye patches, too.
Amazing...That's right let's aim to grow the $5.00 an hour jobs to insure the BVI stays economically viable on the world markets.
& we shouldn't over-regulate either.
We should be competing with Caymon & Fiji & all those other tax havens as it is the primary service we provide to the first worlders
The BVI. will always be in an economic vulnerable position depending solely on these two fragile industries. To shift away from this vulnerability, it must diversify its economic base. But what will drive this diversification? The territory has a dearth of natural resources and lacks the means to earn the hard currency needed to promote economic.
development. Thus it must invest heavily in the only resource that it has----human capital. Specifically, it must promote science, technology, engineering and math. We are dr