ROADTOWN Tortola BVI, 17th October, 2011 -- Ladies and Gentlemen, Fellow Citizens of the Virgin Islands, good morning to you all.

It is no revelation to most of you that of every dollar that the Government of the Virgin Islands spends, sixty cents comes directly from our corporate registry. This simple fact highlights an unnerving vulnerability to any shocks that would affect the business facilitated by this registry and of which I am certain that most of our citizens are aware.

What most of us do not know, however, is that this dependence on the corporate registry is projected to increase by several percentage points in the short term which further increases our exposure to changes in the financial services environment. We, therefore, have two things that we must do simultaneously in respect to this, none of which is new to us.

The first of these is to seek ways in which to diversify the economy and the revenue stream of central government; and the second is to strengthen and consolidate our tax base and the existing sectors on which our economy is based.

In regards to the first component of diversifying the economy, we must begin this debate, and soon, on various industries which would further broaden our tax base without being dependent on the existing ones. In regards to the second option of strengthening our current tax base and economic sectors, further aggressive work must be done in developing our tourism and financial services products.

Today, I will not spend any time on Tourism as time will not allow it, but I will say, that the future success of the Virgin Islands is heavily dependent on this sector and all efforts must be made to guarantee that the decisions we take now and in the future must be complementary to this industry’s development here in the Virgin Islands.

In regards to our financial services industry, and having had to engage in significant efforts within the past months to protect it, I think it is fitting that the people of the Virgin Islands should be made aware of the developments as they relate to one particular, and potentially very significant, concern.

As a prominent player in the global financial services community, and one which has always been firmly committed to not merely meeting, but exceeding, international standards, the Virgin Islands has ensured that, even in its initial ad hoc existence and eventual formalized formation, we were registered as a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

All members, as a prerequisite to joining, must commit to conforming to certain standards in regards to its ability to exchange tax information across borders within a specified period.

In a statement made in September, I gave detailed comments on the actions of the Peer Review Group of the Global Forum in respect to an assessment exercise to which the Virgin Islands was subjected and the results of that review. You will recall that we were not at all pleased with this review and disagreed strongly with some of the major points stated in it.

This was especially so in light of the fact that the assessment by the PRG ran contrary to the findings of previous and current assessments by the IMF, CFATF and IAIS. Notwithstanding this, I also pointed out that we were scheduled to be reviewed within one month of this assessment and was confident that the results would be somewhat different from what was initially assessed.

The concerns in the initial review had to do with our framework legislation that allowed us to quickly and efficiently exchange information between treaty partners.

These concerns in broad terms centered on the following:
1) Our legislative requirements for companies to maintain accounting records;
2) Our legislative framework under which we could exchange information and the extent to which we had the statutory authority to compel persons to provide information; and
3) The size and relevance of our tax information exchange network.

As a matter of seeking to avoid any doubt, interestingly the Virgin Islands had already made changes to the framework legislation on 13th July, 2011 that related to the ability to compel individuals and other partners of the Government of the Virgin Islands to provide information.

Unfortunately, this had come too late to be of significance for the review and, despite the fact that, in practice, the unammended legislative framework had been sufficient to meet all information requests made of the Virgin Islands under signed tax information exchange agreements up to that point.

Though I will avoid getting into the details of this supplementary review that was done just recently in September, I think that in the interest of providing some level of comfort to the financial services industry here, abroad and to those who utilize the structures and regulatory regime of the Virgin Islands globally.

I can stop short of preempting a pending publication of the Global Forum on the results of this review and say that the outcome of the supplementary review is significantly different and somewhat more optimistic than was initially assessed and published in September of this year.

As such, no impediments currently exist to the Virgin Islands’ moving swiftly through the review process of the Global Forum as initially envisioned, save any that would be imposed by an uncharacteristic lack of diligence and commitment to the process by the Virgin Islands.

What lies before us now, and is an active development, is further advancement of our current legislation as it relates to accounting records and the manner in which they are kept.

These developments, however, will only be heavily influenced by the industry and in very short order consultations will be held with them to ensure that any amendments made, not only meet the international standard set by the Global Forum, but in application are practical and fit for purpose.

I need not state that if we do not treat with these requirements appropriately, swiftly and decisively, they will impact the reputation and competitiveness of our financial services industry and, by extension, the eventual ability of the Government of the Virgin Islands to meet the needs of the people of this Territory.

Ladies and gentlemen, we can all agree, and indeed it is a frequently touted phrase that, these are challenging times; and that maintaining the impeccable reputation of our financial services regulatory regime is but one aspect of, but an undeniable component of, the challenges we face as a Territory.

Yet, the task of meeting challenges is made that much easier when we all combine our efforts to work towards one common goal. This not only includes the Cabinet of which I am a part, but also includes every citizen and individual with whom we share a common existence in this Territory.

Fellow citizens, these challenges, if left unchecked, can significantly impact our way of life and especially so as a result of our small size as a Territory and the two fickle sectors that serve as the engines of our economy.

Having said this, however, we can choose pro-activity and optimism over complacency and pessimism, taking comfort in sage advice once offered by the distinguished European statesman, Sir Winston Churchill.

“One ought never to turn ones back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger by half.”
We will rise then to meet and overcome our challenges.
Thank you.

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