The British Virgin Islands has been told to position itself for a significant boom in the financial services sector; the benefits of which is expected to be seen by year’s end.
Director of International Business Neil Smith told BVI News on Wednesday that this is as a result of the European Union (EU) insisting that the territory implement the Economic Substance (Companies and Limited Partnerships) Act which effectively makes it mandatory for offshore financial services companies to set up physical offices in the BVI.
The Act was implemented to keep the BVI off the EU’s blacklist of non-compliant tax haven
Smith explained that while the 400,000 plus registered companies in that sector will be reduced, the number of persons involved in the sector is likely to triple on the ground.
“That’s where we will benefit because you will have more people here buying clothes, food, payroll taxes …” he said.
“It is a tradeoff, so that’s why we are excited.”
Smith said all registered offshore companies must satisfy the new economic substance requirements “by the end of 2019”.
More efficiency now needed at Immigration, Labour
In the meantime, Smith said departments such as Labour and Immigration need to heighten
“If you are going to have a larger population of professionals in order for people to want to come to the BVI, the processes need to be fast,” he stated.
He also mentioned the need for improved air access, internet, telecommunication, and infrastructure.
BVI still greylisted
In the meantime, though the territory is now clear from being blacklisted, it has been placed on the EU’s Annex ІІ list; often referred to as the greylist.
However, Smith said being greylisted is no fault of the BVI.
“We are there because the EU had some issues that they cannot sort out,” he explained.
“They (the EU) don’t know how to deal with the collective investments vehicle which is an investment fund. T
He said the territory and other Overseas Territories who has a growing collective investment vehicle, now have to wait on the EU’s decision.
The EU’s definition of economic substance has to do with financial services companies setting up physical and appropriately-staffed office spaces in the territory.
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