Following a meeting of the Council of the European Union (EU) on Valentine’s Day, today, February 14, 2023, the [British] Virgin Islands (VI) has been added to the EU list of non-cooperative tax jurisdictions (Annex I). Photo: VINO/File

The Government of the Virgin Islands has swiftly issued a press release stating that the compliance status of the VI is not accurately reflected, since recent legislative developments were not considered by the Organisation for Economic Cooperation and Development (OECD). Photo: OECD

The EU Council said it 'regrets that these jurisdictions are non-cooperative on tax matters and invites them to improve their legal framework in order to resolve the identified issues.' Photo: Yahoo News

In a statement, the EU Council found that the VI was not sufficiently in compliance with the OECD standard on exchange of information on request (criterion 1.2). It also noted that this is the first time the VI has been included in the list.

Other countries added to the EU list of non-cooperative jurisdictions are Costa Rica, the Marshall Islands, and Russia.

The EU Council said it "regrets that these jurisdictions are non-cooperative on tax matters and invites them to improve their legal framework in order to resolve the identified issues.”

Recent legislative changes not recognised

The Government of the Virgin Islands has swiftly issued a press release stating that the Territory is committed to complying with evolving international standards on transparency and the fight against financial crime.

It also said the compliance status of the VI is not accurately reflected, since recent legislative developments were not considered by the Organisation for Economic Cooperation and Development (OECD).

“Legislative changes (including BVI Business Companies Amendment Act 2022, and BVI Business Amendment Regulations 2022) made in 2022 and which came into force on 1 January 2023, evidence the steps put in place to meet requirements set out by the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes as part of its Peer Review Process.

“These key legislative developments were not recognised in the most recent OECD Peer Review rating given to the BVI in November 2022, which moved BVI from ‘largely compliant’ to ‘partially compliant’. As a ‘largely compliant’ rating is one of the criteria that determines the “EU List of Non-cooperative Jurisdictions for Tax Purposes” (EU List), the BVI has been added to Annex I as a formality and matter of process,” the VI Government stated in the press release.

Supplementary review requested

It said this is noted by the EU Council which states that this is the ‘first time’ the VI has been included in the EU list (Annex I) and reflects the compliance process of the ‘OECD standard on exchange of information on request (criterion 1.2)’.

“As such, the BVI Government has requested that a supplementary review be granted by the OECD Global Forum that will more accurately reflect the BVI’s current legislative status. Following a supplementary review, the BVI is hopeful that a “largely compliant” rating will be reinstated. This should then ensure the BVI is moved back to Annex II of the EU List, reflecting jurisdictions that have committed to implementing reforms.”

The Government of the Virgin Islands said the VI is 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.

EU List

The EU list now consists of 16 jurisdictions, including American Samoa, Anguilla, the Bahamas, the [British] Virgin Islands, Costa Rica, Fiji, Guam, Marshall Islands, Palau, Panama, Russia, Samoa, Trinidad and Tobago, the Turks and Caicos Islands, the US Virgin Islands, and Vanuatu.

Meanwhile, Hong Kong and Malaysia were granted an extension of the deadline to complete the reform of their foreign source income exemption regimes.

Qatar was also granted an extension because it faced constitutional reform constraints to complete its reform on time.

At the same time, Barbados, Jamaica, North Macedonia, and Uruguay fulfilled their commitments and could therefore be removed from the document, the EU Council said.