The British Virgins Islands will have to wait a few more weeks to learn whether the European Union accepts the territory’s Economic Substance (Companies and Limited Partnerships) Act that was recently passed in the House of Assembly.
As mandated by the EU, the law requires offshore financial services companies registered in the BVI to set up physical, appropriately-staffed office spaces in the territory, if they are to continue doing business with/through the BVI.
Interim Executive Director of BVI Finance, Lorna Smith, said companies within the industry still have “a large amount of questions” in relation to this new law.
“We are looking to get that (the answers) to them through guidance notes from the International Tax Authority, which is the government entity that is responsible for the implementation of the new law. And then we ourselves will issue further briefings to the industry to give them that level of clarity that they would need on their many questions,” Smith said.
The common question now shared between the financial services industry and BVI Finance relates to how the EU will respond to the aforesaid legislation.
“[We are] waiting until I suppose mid-February to know what the decision of the EU will be. We have no reason to be pessimistic but we’ll have to wait and see,” Smith told members of the media on Friday.
The EU threatened to blacklist the BVI as a noncompliant tax jurisdiction if the territory does not satisfactorily address their (the EU’s) concerns about a term referred to as ‘economic substance’.
The EU’s definition of economic substance has to do with financial services companies having physical offices with suitable staff and equipment to justify the amount of revenue and taxes the company generates.
The BVI is one of several jurisdictions the EU has opted to target in this regard.
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