The British Virgin
Islands have double tax treaties with the UK, Japan
and Switzerland; in the last two cases, this means just
that the UK's treaty with the countries concerned has
been extended to the BVI. Prior to the introduction
of the BVIBC Act, the benefit of these Double Tax Treaties
applied only to BVI resident companies, which had to
take the form of Companies Act (Cap. 285) Companies
(see Forms of Company).
Since the overwhelming majority of BVI companies took
the form of the International Business Company, the
International Limited Partnership or the Trust, all
of which were exempt from taxes and fell outside the
ambit of the Double Tax Treaties, offshore investors
were not in a position to use the BVI Double Tax Treaties.
OECD recommenced its offshore tax transparency crusade
with the publication of its black/grey/white list, the
BVI has entered into numerous Tax and Information Exchange
Agreements to avoid being branded as an uncooperative
tax haven (see below). In addition, an amendment to
the tax agreement with the UK was signed in 2008, and
double tax agreements with seven Nordic countries were
signed in 2009.
was placed on the OECD's 'white list' in July, 2009.
Virgin Islands Other International Agreements
British Virgin Islands has a Mutual Legal Assistance
Treaty with the USA. Following pressure in early 2000
from the OECD and the Financial Stability Forum of the
G7, the BVI announced in June that it would include
within the parameters of the treaty access to information
relating to criminal tax investigations and that it
would eliminate the requirement for dual criminality.
This would be accompanied by the introduction of Compulsory
Powers Legislation to provide for access to information
within the BVI.
April, 2002, the British Virgin Islands Government announced
that an agreement had been reached with the OECD without
compromising the BVI's principle of 'even keel' across
Mathavious, Managing Director of the BVI Financial Services
Commission, commented: "We are pleased that an
agreement with the OECD can be reached without compromising
our established views. We are confident that working
with the OECD will enable us to retain our position
as a leading financial centre. We are pleased to be
accepted, and invited to participate, as a full and
equal partner in the OECD forum of activities."
the same time, the BVI announced the signing of a new
Tax Information Exchange Agreement with the United States
after the signing of the agreement, BVI Governor, then
Frank Savage, observed that allowing the US Internal
Revenue Service to pierce banking secrecy in cases of
tax evasion and money laundering, clearly demonstrated
that the country had been working "to increase
the transparency of our systems and reduce the potential
US Treasury Secretary, Paul O'Neill said that the Bush
administration welcomed the agreement with the BVI,
explaining that: "We have an obligation to enforce
our tax laws because failing to do so undermines the
confidence of honest taxpayers of our system. One of
the keys to enforcement of our tax laws is access to
2003 the BVI set up a Financial Investigation Agency.
This agency functions as a specialist investigative
law enforcement arm of government. Its primary focus
is to investigate the BVI financial services industry
and support the BVI mutual legal assistant regimes.
Agency was officially launched in 2004. Highlighting
the agency’s launch as an example of the territory’s
dedication to upholding international initiatives to
combat financial crime, then Chief Minister Orlando
Smith commented: “This commitment is the foundation
of our entire financial industry and, I can assure you,
it will always be a top priority for this Government”.
FIA took over the role formerly carried out by the Royal
Virgin Islands Police Force.
January, 2006, a prospective Tax Information Exchange
Agreement (TIEA) between Australia and the British Virgin
Islands was reportedly derailed at the last minute because
the Caribbean jurisdiction was holding out for special
concessions from Canberra as an inducement to sign the
July 2006, Chief Minister Orlando Smith revealed that
the territory's government was considering its future
participation in the Caribbean Single Market Economy
the BVI is not taking part in the single market process,
Dr Smith stated that the government will continue to
examine the pros and cons of participation, particularly
from the trade angle.
are actively engaged in following the process to see
clearly what the disadvantages and benefits could be
whether we are in or out of that process,” the
Chief Minister explained at a media briefing following
the recent meeting of Caricom heads of government, and
the 43rd meeting of the Organisation of Eastern Caribbean
States (OECS). “This is because we are speaking
about things like trade relationships, which could be
important in the future,” he added.
August 2007, it emerged that the the British Virgin
Islands Financial Services Commission and the Jersey
Financial Services Commission had signed a memorandum
of understanding designed to further co-operation between
the two regulatory bodies.
MoU establishes a formal basis for co-operation, including
the exchange of information and investigative assistance.
Such collaboration should help to protect investors
and depositors and to promote the integrity of financial
services markets in Jersey and the British Virgin Islands.
Harris, Director General of the Jersey FSC, said: “I
am delighted that we have been able to conclude formal
arrangements for sharing regulatory information with
the British Virgin Islands Financial Services Commission.
A number of finance industry firms have a presence in
both jurisdictions and this Memorandum of Understanding
will ensure that where regulatory information needs
to be exchanged it can be done in a rapid and efficient
Mathavious, Managing Director and Chief Executive Officer
of the BVI FSC, added: “As leading international
finance centres, Jersey and the BVI have cooperated
formally and informally on regulatory matters over a
number of years. I am delighted that this Memorandum
of Understanding will enable us to work more closely
together to the benefit of both of our regulatory regimes.
For the BVI FSC, the Memorandum is a further sign of
our commitment towards effective international cooperation
that builds our capacity as a world-class jurisdiction.
added: “The business communities in the BVI and
Jersey already work closely together in many ways. The
Memorandum of Understanding will provide them with further
assurance of being able to rely on high quality regulation
in both jurisdictions.”
May, 2010, the Australian government announced that
agreements for the allocation of taxing rights with
the Isle of Man, Jersey and the British Virgin Islands
had come into force.
so-called Additional Benefits Agreements (ABAs) help
to prevent double taxation by allocating the taxing
rights over certain income of pensioners, students and
government employees who are resident of Australia,
the Isle of Man, Jersey or the British Virgin Islands.
ABAs also provide for a mechanism to deal with disputes
arising from transfer pricing adjustments.
ABA with the Isle of Man entered into force on March
18, 2010; the ABAs with the British Virgin Islands and
Jersey entered into force on April 12, 2010 and April
15, 2010 respectively.
arrangements are part of the new taxation and financial
relationship between Australia and these countries,”
Assistant Treasurer, Senator Nick Sherry, said on May
October 2008 Australian Assistant Treasurer Chris Bowen
and the Premier of the BVI Ralph O’Neal announced
the signing of a Tax Information Exchange Agreement
between Australia and the BVI.
TIEA provides for full exchange of information on request
in both criminal and civil tax matters and builds upon
legislation in both jurisdictions, which already provides
for mutual legal assistance in criminal matters.
the terms of the TIEA, Australia and the BVI have agreed
not to apply prejudicial or restrictive measures based
on harmful tax practices to residents or nationals while
the TIEA is in force and effective. Further, Australia
will remove any governmental references to the BVI as
a ‘tax haven’ and will list the BVI as an
‘information exchange country’ in the Taxation
Administration Regulations 1976. This will provide residents
of the BVI with access to reduced withholding tax rates
on distributions of certain income they may receive
from Australian managed investment trusts.
addition to the TIEA, Australia and the BVI have signed
an agreement for the allocation of taxing rights with
respect to certain income of individuals, which will
provide benefits to Australian and BVI residents. Australia
and the BVI have also agreed to enter into discussions,
when appropriate, to foster further co-operation in
areas of mutual interest.
response to the signing of the TIEA, Mr Bowen said:
TIEA between Australia and the BVI demonstrates both
jurisdictions’ commitment to international co-operation
and effective exchange of information. The BVI’s
co-operation in fostering these international standards
of transparency and exchange of information enhances
its reputation as a globally integrated and responsible
TIEA also complements the strong commitment of the governments
of Australia and the BVI to international standards
on anti-money laundering and counter-terrorism financing,
as set by the Financial Action Task Force. The Australian
government particularly welcomes the BVI’s admission
as a full member to the International Organisation of
Securities Commissions, where it joins more than 100
jurisdictions with recognised high standards of regulation
addition to the TIEA, we have also negotiated a further
package of measures that will bring benefits to the
BVI, including technical assistance, non-discriminatory
tax treatment and an agreement covering the allocation
of taxing rights for students and government employees.
The BVI looks forward to an ongoing cooperative relationship
Residents of ‘information exchange countries’
are subject to withholding tax at the following rates:
22.5% for fund payments made between 1 July 2008 and
30 June 2009; 15% (final) for fund payments made between
1 July 2009 and 30 June 2010; and 7.5% (final) for fund
payments made from 1 July 2010.
the 2008-09 income year, as an interim measure, investors
resident in information exchange countries are eligible
to claim a deduction for expenses relating to fund payments.
The net amount will be subject to tax at 22.5%. Residents
of other countries are subject to a final withholding
tax of 30%.
days after it sealed the arrangement with the government
of Australia, the BVI signed a TIEA with the UK.
BVI/UK TIEA provides for exchange of information on
request relating to a specific criminal or civil tax
matter under investigation. This agreement builds upon
legislation in both jurisdictions which already provides
for mutual legal assistance in criminal matters.
addition to the TIEA, BVI and the United Kingdom have
signed an agreement for the avoidance of double taxation
with respect to taxes on income, which will provide
benefits to BVI and UK residents. Both Governments have
also stated that neither party has any intention of
introducing any discriminatory, prejudicial or restrictive
measures based on harmful tax practices while the TIEA
is in force.
response to the signing of the TIEA, O’Neal said:
“The conclusion of this TIEA demonstrates the
commitment of both the BVI and the United Kingdom governments
to international co-operation in transparency and exchange
of information. We welcome HM Treasury’s acknowledgement
of BVI's leadership role in global tax standards and
our reputation for good governance in financial matters.
As is recognised in the TIEA, both governments have
long been active in international efforts in the fight
against financial and other crimes. The BVI will continue
to foster and develop international best practice in
all areas of financial regulation.”
added: “In addition to the TIEA, we have also
successfully negotiated a declaration of intent for
non-discriminatory tax treatment and a double taxation
agreement covering taxes on income for pensioners, students
and government employees.”
tax agreements between the BVI and the UK will enter
into force as soon as both governments have completed
the legislative procedures needed to give them effect.
May 2009 British Virgin Islands government announced
the signing of bilateral tax information exchange agreements
with the six Nordic countries, which include the Faroe
Islands, Finland, Greenland, Iceland, Norway and Sweden
at the Icelandic Embassy in Copenhagen, Denmark, on
agreements were signed by BVI Minister of Health and
Social Development Dancia Penn and senior officials
from the Nordic group. The OECD model agreements will
provide for the exchange of information in tax matters
in both civil tax matters and where there is concrete
proof of the perpetration of a tax crime.
the ceremony Penn also concluded agreements for the
avoidance of double taxation with the Nordic group on
behalf of the British Virgin Islands.
June 2009 BVI leader Ralph O’Neal announced the
conclusion of a Tax Information Exchange Agreement with
France. The signing of the agreement brings the British
Virgin Island’s tally of such agreements to eleven,
one short of being deemed ‘fully-compliant’
with the OECD’s principles of transparency and
agreement will provide the respective countries’
tax authorities with information on tax matters upon
request in cases where there is sufficient concrete
evidence of the perpetration of a tax crime. It was
signed by O’Neal and French Budget Minister Eric
Woerth, who commented that the signing of the agreement
was “further evidence of the British Virgin Islands’
willingness to implement the OECD principles of transparency
and information exchange,” adding that it would
have “a favourable impact on the British Virgin
Islands in relation to the application of specific French
tax provisions, based on an effective exchange of information
at a press conference before the signing O’Neal
commented on the BVI's intention to be removed from
the OECD’s grey list:
12th TIEA is in the very near future. Although that
would reach the number suggested by the OECD and the
G-20, we do not intend to stop there; we intend to continue
to negotiate with other countries like Germany, Austria,
Brazil, Mexico, Argentina, Canada and as many countries
as we can make contact with and are willing to negotiate
with the [British Virgin Islands].”
August, 2009, the BVI signed its 12th Tax Information
Exchange Agreement (TIEA) after concluding an agreement
with New Zealand.
signing, which took place on August 13, meant that the
BVI was placed on the “white list” of those
countries which have “substantially implemented”
the internationally agreed tax standard as set by the
Organization for Economic Cooperation and Development
British Virgin Islands Premier, Ralph O’Neal announced
that, in line with the jurisdiction’s commitment
to acting as a responsible financial services centre,
he would travel to the Netherlands to sign the islands’
thirteenth tax information exchange agreement on Friday,
agreement marks a significant milestone for the territory,
O’Neal noted, observing that it illustrates the
jurisdiction's continued commitment to ensuring transparency
in the operation of the financial services sector and
to the principles of good governance, despite surpassing
the twelve TIEA quota set by the G20.
December, 2009, the BVI signed texts with Ireland and
agreements were signed by Premier and Minister of Finance,
Ralph O’Neal, Ireland’s Ambassador to the
United Kingdom, Bobby McDonagh, and Chinese Deputy Commissioner
of the State Administration of Taxation, Qian Guanlin.
The two agreements took the territory's tally of such
agreements to 17.
February, 2011, the Indian High Commissioner of India
and BVI's Deputy Premier signed a Tax Information Exchange
Agreement. A joint declaration was signed as part of
he TIEA. In it, the Governments of BVI and the Republic
of India state that both countries are active, constructive
and cooperative members of the international community
with globally integrated and responsible finance centres.
It further states that: "This Agreement represents
a milestone in relations between the two Governments
and both are committed to examine other areas of mutual
co-operation and benefit, including a double taxation