By Davion Smith, BVI News Journalist
The British Virgin Islands has ranked number 16 on the 2018 Financial Secrecy Index.
The Financial Secrecy Index ranks countries according to their secrecy and the magnitude of their nefarious offshore financial activities.
United Kingdom-based financial advocacy group, Tax Justice Network (TJN) published the study this week.
According to the report, the BVI had a relatively high secrecy score of 69 out of 100.
“The secrecy here comes most importantly from the BVI’s lax, flexible, ask-no-questions, see-no-evil company incorporation regime, which allows owners of companies to hide behind ‘nominees’ to achieve strong secrecy, and to set up companies quickly and at low cost,” the TJN said in its report.
It continued: “This supposed ‘efficiency’ of incorporation has translated into carte blanche for BVI companies to hide and facilitate all manner of crimes and abuses worldwide.”
The report went on to blame the UK for doing virtually nothing to regulate the territory.
“The UK ultimately has the power to strike down BVI secrecy legislation, though it chooses not to,” the TJN said.
BVI responsible for tax losses of over $37 billion
The BVI’s relatively high global placement on the secrecy index is because of the territory’s longstanding link to a ‘wave of scandals’, the TJN reasoned.
Among the biggest scandals was the 2016 Panama Papers leak which effectively uncovered how the world’s rich used tax havens to hide their wealth. Panama Papers was a leak of millions of files from the world’s fourth-biggest offshore law firm, Mossack Fonseca.
“Half of the nearly quarter-of-a-million companies set up by Mossack Fonseca that the Panama Papers identified were incorporated in the BVI; the leak could just as well have been called the BVI Papers,” TJN said in its report.
And while citing French economist Gabriel Zucman’s research on global tax evasion, the TJN said the BVI is responsible for global tax losses of $37.5 billion.
BVI in top two Caribbean countries on Index
The 2018 Financial Secrecy Index focuses on 112 jurisdictions.
The BVI is the second highest-placed territory in the Caribbean on the Index. The highest-placed Caribbean country is the Cayman Islands, which is third on the Index behind Switzerland and the United States.
The BVI’s poor ranking in the Financial Secrecy Index comes just over a month after the European Union omitted the BVI from its first-ever tax haven Blacklist.
Reports are that the BVI was shown leniency because of the recent hurricanes, but has until the end of this year to improve its tax policies.