ROADTOWN Tortola BVI,  September12th, 2011--This statement is to inform you that as a member of the Global Forum, the British Virgin Islands is currently being reviewed by the peer review group of the Organisation for Economic Co-operation and Development (OECD) to ascertain the quality of the Territory’s legal and regulatory framework for the exchange of information.

The Global Forum on transparency and exchange of information for tax purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdictions including the BVI, with all jurisdictions participating on an equal basis.

The forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes.
I can assure you that the BVI is committed to transparency and exchange of information. This is in keeping with the international standard set by the OECD in 2002 and since then we have been diligently working toward meeting this standard.

The standard provides for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party.

Fishing expeditions are forbidden, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries.

All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are currently being reviewed by the peer review group which is comprised of thirty members.

This process is undertaken in two phases. Phase one reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase two reviews look at the practical implementation of that framework.

Some Global Forum members are undergoing combined – phase one and phase two – reviews.
All jurisdictions are assessed on the basis of the following elements:

1. The availability of ownership and identity information for all relevant entities to their competent authorities;
2. The keeping of reliable accounting records for all relevant entities;

3. The availability of banking information for all account holders;
4. Competent authorities’ power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their jurisdiction in possession or control of that information;

5. The compatibility of the rights and safeguards applicable to persons in the requested jurisdiction with effective exchange of information;

6. The effectiveness of exchange of information mechanisms;
7. The extent to which the network of information exchange covers all relevant partners;

8. Confidentiality of exchange of information mechanisms; and
9. The exchange of information mechanisms respecting the rights and safeguards of the taxpayers and third parties

A tenth element; the timeliness of exchange of information is only assessed during phase two. All review reports are sent to the Global Forum for adoption and are thereafter published.

Within this context, in July of this year the BVI was one of several countries assessed by the peer review group to establish that the requisite elements described above were in place. While a majority of the elements were in place, the peer review group took issue with three elements, namely accounting records, access powers and relatedly, the effectiveness of the exchange mechanisms.

With regard to the accounting records, they concluded that there was not sufficient consistency in relation to the requirements for keeping of accounting records for partnerships, trusts nor mutual funds (element A. 2 and (2) above), nor was there a corresponding minimum period to maintain these records and underlyin documentation. The BVI considered this to be a fair conclusion especially as it was one that was common to many of the smaller jurisdictions of the Global Forum.

After a lengthy debate the majority of the peer review group also concluded that the BVI’s access powers to obtain and exchange information were not sufficiently broad, under its enabling legislation to compel all ‘foreseeably relevant’ information such as accounting records from persons other than banks or other financial institutions or persons acting in an agency or fiduciary capacity.

The BVI’s considered view was that this was a matter of interpretation as the Mutual Legal Assistance Act covered this at Article 5 through reference to ‘other person’.

Moreover, the BVI had been exchanging information on the basis of the extant Act with its treaty partners whenever required. Be that as it may the BVI pointed out that in early July out of an abundance of caution and to put the matter beyond doubt, the House of Assembly had amended the Mutual Legal Assistance Act to explicitly provide for the exchange of every kind of information from any person or entity.

In the end, however, the peer review group decided that because the legislation had not been in place by May 2011, the latest date for assessing jurisdictional developments, that they could only note this amendment. This fact is also noted at paragraph five of the Executive Summary of the published Report on the Virgin Islands.Thus element B 1 (4 above) was also considered to be not in place.

Consequently, the peer review group was of the view that the limitations of the BVI’s access powers meant that the C 1 element which relates to the effectiveness of the exchange of information mechanisms (6 above) was compromised and therefore could not be considered to be in place.

Following a determination of the nature described above, the norm is that the jurisdiction must wait for at least six months before it can submit a supplementary report addressing the corrective measures taken in response to the peer review group’s determination.

However after further consideration it was agreed that the BVI should submit its supplementary report at the next peer review group meeting scheduled for 18th September. It is expected that the amendments made in July would be considered at that time thereby enabling the BVI to move to phase two of the review.

I have been in discussions with our BVI team leader and Financial Secretary Neil Smith who said that although not ecstatic, he is satisfied with this decision as it allows the BVI to submit a supplementary report within one month of publication of the Report.

This speaks to the maturity of this jurisdiction as well as to its ability to continue to constructively engage with the OECD Global Forum.I am pleased to say that the BVI’s legal and regulatory regime continues to receive high praise from all supranational organizations year after year.

Less than a year ago the International Monetary Fund (IMF) in completing its comprehensive review of the BVI publicly recognised the strength of the BVI’s regulatory regime and its ‘willingness to be a full partner in international information sharing and cooperation.

Just the year before the Caribbean Financial Action Task Force (CFATF) in publishing its Report on the BVI specifically noted that the Virgin Islands has maintained a robust public policy commitment to ensuring that the territory pays its part in the global fight against money laundering and the financing of terrorism.

Most recently, the BVI was commended by the International Association of Insurance Supervisors (IAIS) for continuing to meet international standards of regulatory cooperation.

In these circumstances I have every reason to be confident that the peer review group will determine that sufficient elements are in place to allow the BVI to move to the second phase of the review by the next sitting of the Global Forum scheduled for October.

Thank you.

*************************
DISCLAIMER
 
This article was posted in its entirety as received by SKNVibes.com. This media house does not  correct any spelling or grammatical error within press releases and commentaries. The views expressed therein are not necessarily those of SKNVibes.com, its sponsors or advertiser