For the first time, the BVI’s financial services industry has provided information about some businesses registered here that will help the entities’ resident countries to collect valuable tax from their offshore activities.
Eleven other countries labelled as notorious tax havens have provided similar information to jurisdictions across the world that will now get to collect taxes from offshore assets their citizens own.
They are Anguilla, the Bahamas, Bahrain, Barbados, Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands, and the United Arab Emirates.
The countries have disclosed this information to meet standards set out by the Organisation for Economic Co-operation and Development (OECD) Forum on Harmful Tax Practices.
This information includes the identity of the entity, its activities, and the ownership chain of entities.
And countries that get the information will now be able to carry out risk assessments and apply their controlled-foreign company, transfer pricing, and other anti-base erosion and profit shifting provision.
For a long time, offshore countries have pushed back against disclosing financial services information because they feared it would prevent clients from doing business with them.
But they have faced major pressure from international tax lobbies in recent years and some jurisdictions have been blacklisted from major markets.
The new disclosures are required for entities located in no or nominally taxed jurisdictions that derive income from geographically mobile activities, such as headquarters, distribution centres, service centres, financing, leasing, fund management, banking, insurance, shipping, holding companies, and provision of intangibles.
The OECD is a powerful economic bloc of 37 countries. Offshore low-tax countries like the BVI have an interest in following standards required by the OECD as pushback could lead to loss of business for these jurisdictions which depend heavily on the financial services industry.
“Today’s first exchanges of information on the previously unknown operations of entities in low tax jurisdictions are good news for tax administrations around the world, as they will now have regular access to information on the activities and income of entities in low tax jurisdictions that are held or controlled by their taxpayers,” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration.
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