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‘We are in trouble’ - Hon Julian Fraser RA on Economic Substance Bill

- Says EU requirements are too mammoth & unrealistic
In making his contributions to the debate of the Bill, Honourable Julian Fraser, RA (R3) described the requirements of the EU as “untenable”. Photo: VINO/File
The Bill was tabled by Premier and Minister of Finance Dr the Honourable D. Orlando Smith (AL), who said that among the objectives of the bill, 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. Photo: VINO/File
The Bill was tabled by Premier and Minister of Finance Dr the Honourable D. Orlando Smith (AL), who said that among the objectives of the bill, 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. Photo: VINO/File
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. Photo: Internet Source
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. Photo: Internet Source
ROAD TOWN, Tortola, VI - The Virgin Islands (VI) could see itself facing economic blacklisting from the European Union (EU), if a Bill entitled “Economic Substance Company and Limited Partnership Act 2018,” tabled in the House of Assembly (HoA) yesterday, December 18, 2018, is not passed.

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.

10 Responses to “‘We are in trouble’ - Hon Julian Fraser RA on Economic Substance Bill ”

  • cromwell (19/12/2018, 11:12) Like (10) Dislike (1) Reply
    In the real world, one of the requirements when imposing legislation, is, it has to be reasonable, what the EU is imposing on us is far from reasonable, and, tantamount to blackmail. There are hundreds of thousands of companies throughout the EU that have neither employees, or, premises, companies established as holding corporations, facilitating estate planning, liability protection, and, many more, will the EU force the same rules on these companies, or, are we dealing with double standards here. Shame on the UK for not fighting our corner on this one.
  • 1 (19/12/2018, 11:40) Like (7) Dislike (2) Reply
    fraser is on point
  • wize up (19/12/2018, 12:11) Like (4) Dislike (0) Reply
    the new-world-order is in full swing: the British Virgin Islands is under the umbrella of Great Britain: Great Britain have a fallout with the Europen Union: it is far easier for the Europen Union to pick a fight with the Overseas Territories belonging to Great Britain than to go up against Great Britain: the British Virgin Islands should return to subtainable growth: some of we could recall back in the 60s this territory sustained itself: our fore parents were the boat builders, the farmers, the fishermen; coldpit burners, boat captains: as a matter this territory exported produce to the st thomas & St. John: progress is a very good things but when such progress is taken for granted one then find themselves in harms way...as a prime example, the costal waters that our forefathers once use to put food on our tables is now in the hands of foreign investors(yes the territory obtains taxes/duties from those establishment) what happens when these folks had enough of BVI(remember our country is not the only place in the world with sea, sun & sand)...at the end of the day every jurisdiction under the sun is seeking to collect their fair share of money: taxsation(money make the mare run!!): never put all of your eggs in one basket: this territory rise above the bird sanctuary phase and our people will survive with good political leadership
  • guy hill (19/12/2018, 14:47) Like (5) Dislike (1) Reply
    Trust God Only with this. Prayers are up.
  • Staypoor. (19/12/2018, 17:45) Like (1) Dislike (1) Reply
    "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".

    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.

    I guess this say pretty beaches, white sand and beautiful water doesn't justify you living a good life!!!

    You ain't got much to offer so how dear you!!!!
  • one thing (19/12/2018, 19:40) Like (1) Dislike (1) Reply
    Fraser is a master at naming what's wrong but don't ask him to go to fix it or it will get worse.
  • Political Observer (PO) (19/12/2018, 23:17) Like (2) Dislike (0) Reply
    In spite of having ample time to respond to the EU, the government is now scurrying at the 11:59th hour to meet the 12/31/18 dead line. Government earns 60% of its revenue from financial services and together with tourism equates to over 90% of GDP. Requiring companies to maintain physical facilities with full operating staffing in the short-term will be a heavy lift. The current space supply availability may not be able to meet the demand. Nonetheless, if financial services tank, it will put a serious dent in and a serious hurt on the economy, quality of life, standard of living, per capita income, employment......etc. Strong, creative, innovative......etc leadership and management is needed to protect and sustain the financial services. There is a fierce urgency of now. No more procrastinating; rebuilding/improving/protecting the financial services must move full speed ahead.
    • Cassandra (20/12/2018, 18:03) Like (0) Dislike (0) Reply
      There will be no need to find the physical premises and employees. BVI companies will just migrate to other territories where the requirements for them are not so strict: Cayman and Bermuda for example. As for the BVI, this Bill if made law is suicide for the financial services industry here.


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