Global tax won’t hurt BVI financial services
Local experts are examining the implications of an impending global tax that could affect profits in some sections of the financial services industry.
The tax is being pushed by the Organization for Economic Cooperation and Development (OECD), and would see countries like the BVI charging a 15 percent tax from multinational companies that use its financial services.
But Minister for Financial Services Lorna Smith yesterday told journalists that the BVI doesn’t have to worry about this tax as it will not affect the major earning areas of the local financial services sector.
“The BVI is the second largest hedge fund jurisdiction in the world – after the Cayman Islands. Hedge funds are not caught by this global minimum tax initiative nor are investment funds generally,” Smith explained. “The global minimum tax applies to only multinational enterprises with a global profit of 750 million euros ($820 million). We have relatively few such companies.”
This tax would no doubt scare away some multinational companies that usually flock to the BVI to enjoy zero-tax benefits.
But despite the potential loss of earnings, financial services jurisdictions have to consider implementing the policy as more people continue to call for the wealth of the rich to be taxed.
In the meantime, CEO of BVI Finance Elise Donovan explained that the BVI isn’t required to implement the 15 per cent tax. She said jurisdictions are asked to examine the proposed law to see how it can work for them.
“It’s not a one size fits all when it comes to the OECD global minimum tax. Essentially, all countries will have to do an assessment to determine how they are going to adapt this global tax policy or whether they are going to adapt it. But the general consensus is that we all have to do an assessment to determine how we are going to move forward in this area,” Donovan explained.
Bermuda recently signalled that it has started its own assessment as it aims to implement the tax in 2025.
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They trying to fool the people of course it will affect the bvi like other jurisdictions
Toady it is a 850m or more tax, tomorrow it could be 1m or more tax. Cannot trust the UN or any other taxing authority unless it is local and controlled by the people.
A suggested 15% tax on the income/profit of BVI corporations would most certainly produce a negative affect the BVI financial services industry.
I cannot understand this “tax the rich” mantra, except as a shameless manifestation of envy. They already pay more tax in quantitative terms, so putting myself in their shoes I would certainly not want to give more money to corrupt politicians who are very good at squandering public funds and not much else at all. I would much rather keep my accumulated wealth away from sticky ministerial fingers; no matter where they are on the globe!
BVI isn’t the world’s second hedge fund jurisdiction by a long way. And funds make up only a fraction of the BVI business. But hey ho.
If BVI sign up to global tax, companies would move to other jurisdictions that are still at zero tax. This would mean that Registered Agents would instantly lose the majority of their clients. Lawyers and accountant would see a huge rise in work for a period then work would dry up. BVI would be seriously affected and it would be like the 1960s again. I’m sure the white expats would get the blame, as always.