By Davion Smith, BVI News Staff
A concern has been raised that regular local businesses such as construction companies are now becoming directly affected by the crippling regulations that international superpowers like the European Union (EU) are imposing on the BVI’s financial services industry.
According to opposition legislator Julian Fraser, these everyday local businesses are being dragged into the financial services fiasco because their owners made one critical decision: they registered their respective businesses as an ‘incorporated company’.
An incorporated company (a legal entity) acts as a separate entity from the business owner and protects owners from liabilities they might incur from running the business.
But, since EU-mandated laws such as the Economic Substance (Companies and Limited Partnerships) Act cannot differentiate between a regular local business and an offshore financial services company, both business types are subjected to the same regulations and restrictions.
Create separate categories for local and foreign companies
This does not spell well for the local business community and, for this reason, Fraser is calling on the next elected government to implement a policy that distinguishes a local business from an offshore company in financial services.
“I want anyone in this House [of Assembly], including myself, who will be resurfacing as the leader of this territory to take note that one of the first order of business is to revisit these issues of legislation and the system itself that have these conditions that are going to affect our local companies unfairly.”
In specifying the types companies that he said are being unfairly affected, Fraser said: “I am talking about the [average] guys who own the shoe stores and the gas stations that have been encouraged to incorporate his business because of liability purposes. However, because we have one category of companies, they are subjected to the same rules and regulations and all these onerous restrictions that are being placed on them.”
Over-regulation now the detriment of BVI
Another legislator Andrew Fahie also raised concern about the issue in the recently-dissolved House of Assembly.
He said: “I am concerned … that we are overregulating the industry to the detriment of our people because it is clear that we’re only going to be able to save a certain percentage of this industry.”
Although the policies being imposed on the BVI are predicted to have unfavourable impacts on the territory’s main revenue-generator — the financial services sector — local legislators have remained compliant so as to avoid diplomatic sanctions from superpowers such as the EU.
The EU and even the United Kingdom has often claimed that the BVI is a tax haven. And, as such, they have embarked on what can be described as a witchhunt on the BVI in a bid to prevent financial crimes such as money laundering and tax evasion.
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