BVI News

Nat’l Importance: Cabinet extends economic substance lawyer’s contract

Outgoing Premier Dr D Orlando Smith and Governor Augustus Jaspert.

It appears the British Virgin Islands might not have entirely satisfied the European Union (EU) in relation to the recently-passed economic substance legislation, given that Cabinet decided five days ago to seek further services from the two overseas attorneys who drafted the law.

Cabinet in its February 20 meeting approved to pay one of the attorneys an additional sum not exceeding $100,000 to do further work on the said economic substance law.

According to a report on the Cabinet meeting, the extension of the attorney’s contract was being done urgently and was described as a matter of ‘national importance’.

The report said Cabinet “approved the further engagement of Junior Counsel Mr Jack Rivett to continue work in conjunction with and to assist Mr Michael Furness … to draft regulations to the Economic Substance Act, 2018 and assist with ancillary matters.”

“[Cabinet] waived the tender process [to do further work on the law], on an exceptional basis, in relation to the engagement of such counsel in the interests of continuity and on the grounds of national importance and urgency,” the report added.

READ: Gov’t hires attorneys to help keep BVI of EU blacklist

News that the BVI is seeking further services from the attorneys come on the cusp of a general election whereby the territory might see a new party emerging as government.

This news also comes fewer than a month of the now-dissolved House of Assembly making emergency amendments to the aforesaid law.

Those amendments were passed in local parliament to continue the BVI’s campaign to keep off the European Union’s blacklist of ‘tax haven’ jurisdictions.

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.

The BVI is one of several jurisdictions the EU has opted to target in this regard.

Editor’s note

The EU was expected to decide on whether they accepted or was satisfied with the territory’s Economic Substance (Companies and Limited Partnerships) Act by mid-February.

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4 Comments

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  1. Laura says:

    The entire House of Assembly of the BVI needs to be united in defence of and support of our Financial Services Industry, and consequently the livelihood of our dearly beloved country. We as a people need to find a pride and proudness within our government’s ability to unite towards the common goal of protecting our industry. It is unfortunate however, that time after time, we find ourselves having to jump through hoop after hoop to continue to satisfy an outside watchdog which brings nothing substantial to our shores.

    Whilst the necessity of the Economic Substance Act is to satisfy requirements from the European Union that companies registered in the BVI maintain a physical presence, employees and revenue generating activities, it seems to be rather cumbersome in nature but can also in fact harm our country and economic activity. However, passing this legislation is a necessary evil of sorts, as its implications of being blacklisted is not in our best interest, or else could cause harm in an even more immediate way, as current financial activity from legitimate and fully compliant financial organizations could be compromised.

    Hence, the government of BVI need to preserve our economy. The public must be aware that between this current issue, and the issue of beneficial ownership, that the EU and UK watchdogs are vigilant but it does seem that every year the demands and goalposts continue to be moved to require more and more (when does it end). But as a people who were considered nothing more than a bird sanctuary we must continue to work hard, continue to ensure that we as a people and nation thrive, and continue to ensure that our financial services and other essential industries grow and prosper well.

    If there is one thing we should be united on surely it must be this. #BVIpride

    Like 11
    • Dear Laura says:

      First, if the BVI remains on the EU blacklist, you say that the EU brings nothing to the Territory. Well Dear, the EU can impose sanctions on the Territory. Those sanctions can include companies from selling the Territory fuel to not allowing banks to operate. Thus, satisfying the EU is a top priority. Do a bit of research into how countries make others comply through sanctions such as the US against Iran and North Korea.

      Next, the BVI financial sector has been harboring illegal money through offshore corporations owned by major dictators, drug kingpins and criminals in general. Thus, it has become the position of the “first world” to stop “third world” aka the BVI from harboring these criminal enterprises. Thus, the Territory is going to lose its financial sector. The people of the Territory will need to actually figure out how to provide services other than criminals paying fees on their corporations to keep the eyes of law enforcement away. In other words the people of the BVI will actually have to work real jobs, half the government workers will be terminated and the tourism industry will need to be brought to a level where the tourist is actually welcome to the Territory. Start thinking fishing and farming.

      Like 2
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  2. Diasopra says:

    Financial services is 1/2 of the BVI economic twin pillars, contributing approx 60% of government revenue. It is an important and critical spoke in the services delivery wheel. Financial services lower the tax burden on VI residents. Consequently, the NDP should have been more responsive to EU concern and request. It dragged its feet until the the 11th hour and the issue is not resolved; it is still unfinished business at 12 o’clock hour. Nonetho, the next government cannot skip a beat on this critical issue. Agree with Laura, this is an all hands on deck issue whether one is green, red, blue, orange, indigo…….etc. It must be a can do and must do issue.

    Like 12
  3. Diaspora says:

    Financial services is 1/2 of the BVI economic twin pillars, contributing approx 60% of government revenue. It is an important and critical spoke in the services delivery wheel. Financial services lower the tax burden on VI residents. Consequently, the NDP should have been more responsive to EU concern and request. It dragged its feet until the the 11th hour and the issue is not resolved; it is still unfinished business at 12 o’clock hour. Nonetho, the next government cannot skip a beat on this critical issue.

    Agree with Laura, this is an all hands on deck issue whether one is green, red, blue, orange, indigo…….etc. It must be a can do and must do issue. Still have a problem with an outgoing making major non-emergency decision in the waining days before leaving office.

    Like 4
    Dislike 1

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