‘We are in trouble’ - Hon Julian Fraser RA on Economic Substance Bill
The Bill was tabled by Premier and Minister of Finance Dr the Honourable D. Orlando Smith (AL), who said that among the objectives, one is to address EU concerns about BVI registered companies shifting profits from high tax jurisdictions to benefit from the territory’s zero rate of corporate income tax.
The essence of the EU’s concern according to Premier Smith, is the fact that the VI has insufficient economic substance requirements for entities doing business in the Territory.
Untenable
In making his contributions to the debate of the Bill, Honourable Julian Fraser, RA (R3) described the requirements of the EU as “untenable”.
“If Economic Substance was to materialize, it would be a real good thing for the Virgin Islands, providing the government of the day made sure that Virgin Islanders were the beneficiaries of the Economic Substance,” he said while noting that Government has the responsibility to ensure that the legislation protects its citizens.
Mr Fraser further noted, “The tasks that we are pursuing Madam Speaker, are so mammoth and it is so unrealistic we have to come to the reality that we are in trouble.”
This trouble according to Hon Frasers is because of the flip side of the bill, “Outside of the pages of this document Madam Speaker, you would learn that economic substance is actually the setting up of headquarters in the BVI for these companies that we have registered.”
He said that those headquarters are not just an individual sitting behind a desk but rather, “They are actually supposed to perform… Will that ever happen, can you see that happening Madam Speaker?” he questioned.
Blacklisting
Hon Fraser said that if the territory fails to meet the requirements being sought by the EU, it can mean that the VI will most certainly become blacklisted.
“And here are the options of becoming blacklisted Madam Speaker, like playing Russian roulette ... If you don’t pull the trigger I am going to kill you, if you pull the trigger I am not guaranteeing you are going to live or you are going to die. This is where this bill puts us.”
“We are in between a rock and a hard place, just like where I sit right now Madam Speaker, between a rock and a hard place… and I think Madam Speaker, despite all desires to avoid alarming the public I think the public needs to know about these things,” he said.
“They need to know about it in further details, more details than just coming here and reading the object [Objectives] and reasons because when the proverbial stuff hits the fan Madam speaker, they are the ones who will have to carry the brunt,” he told the HoA.
More Dialogue
While emphasizing the need for more dialog on the subject with the people of the territory, Hon Fraser also said that the opposition has the responsibility to take the information on the road to the people, “This matter is not just for the government and the industry, it’s a matter for the people of the territory Madam Speaker.”
He also shared concerns that Overseas Territories and the crown dominions are the ones who are foremost with such financial services matters.
“And we are not working together for a common goal. I can’t see one getting blacklisted and all not getting blacklisted Madam Speaker… and I can’t see one being saved and the others not.”
Despite his concerns about the bill, Hon Fraser said he had no choice but to support it.
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This trouble according to Hon Frasers is because of the flip side of the bill, “Outside of the pages of this document Madam Speaker, you would learn that economic substance is actually the setting up of headquarters in the BVI for these companies that we have registered.”
He said that those headquarters are not just an individual sitting behind a desk but rather, “They are actually supposed to perform… Will that ever happen, can you see that happening Madam Speaker?” he questioned.
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You ain't got much to offer so how dear you!!!!