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by pltm
(PLTM) - Executive Director of the Office of International Business (Regulations), Neil Smith says the BVI will not be altering its financial services laws to please the European Union (EU), that has threatened to blacklist the Territory as a tax haven.
The EU has given the BVI until the end of 2018 to put measures in place in order to prove that it's laws do not facilitate tax avoidance by wealthy individuals around the world.
However, Smith maintains that the BVI's laws do not facilitate tax avoidance and will not be changed because the EU has a problem. He says what the BVI government will do instead, is provide the EU with evidence that shows that its laws are adequate enough to prevent people from using the Territory to hide their wealth.
Smith says he has noticed that the EU has a major problem because the BVI's tax structure is different from those of its member countries. He says the EU is treating the BVI and the Cayman Islands unfairly, as it seems to want these Territories to mirror their tax structure.
"They're being unfair to the BVI and others like it, Cayman and Bermuda as well. What I find is that where our systems are different from theirs, they start to make the argument that people only come here to avoid taxes. But we are a semi-sovereign state and we should have the ability to have our own systems; they don't have to look like yours," Smith explained.
He said the EU has an issue with the lack of income tax in the BVI and thinks this is a breeding ground for those who want to avoid this tax. However, Smith said companies don't gravitate to the BVI mainly because of this. He said incorporation rates are lower in the BVI, there is a stable political climate and a good court system which attracts business people. He also argued that the BVI's transparency standards are higher than that of many EU countries.
"The government has taken this seriously and something is being done about it. We are working behind the scenes. It's basically to give information to prove to them in a robust, analytical way that what they are saying is not true. That's what's being done on a technical level," Smith said.
He said BVI government representatives may also have to travel to Europe to lobby the EU and get its point across.
Earlier this week, Interim Executive Director of BVI Finance, Lorna Smith defended the BVI’s financial services sector in an opinion piece published in Scottish media outlet, The Herald.
She said the BVI is not a tax haven, but is a tax neutral jurisdiction.
The EU has created a blacklist of 17 countries it regards as tax havens and has told its member-states to take action against them. However, because of the impact of the September hurricanes, the EU gave the BVI time to adjust tax laws and policies to avoid being blacklisted as a tax haven.
