BVI Explains Agreements With OECD, US

Tax-News.com, London

22 April 2002

Last Friday, the British Virgin Islands issued a press release commenting on the agreement it had reached with the OECD which prevented its inclusion on the most recent 'blacklist', and the information exchange treaty it signed with the US.

' The British Virgin Islands (BVI) Government has announced that after close discussions with the OECD with regard to the "harmful tax competition initiative", a formal and mutually acceptable agreement to ensure that the BVI will not appear on any forthcoming blacklist was reached on the 3 April 2002. In addition, the BVI has also extended its information exchange treaties by signing a new Tax Information Exchange Agreement with the USA.

' The BVI is proud to announce that an agreement has been reached with the OECD without compromising the BVI principle of 'even keel' across all nations. This agreement means that the BVI will not appear on any forthcoming OECD blacklist of uncooperative nations.

' The BVI has always maintained that it will not capitulate on issues that are fundamental to the international competitiveness of its financial services industry, or the well being of the BVI Islanders. As such the BVI commitment has been tailored to suit the BVI industry and is firmly based on the BVI principle of even keel, which comprises two elements. The first is to foster mutual respect between the OECD and the BVI. The second is the establishment of a level playing field across all nations.

' Mutual respect can be demonstrated by the OECDs acceptance of the view, long held by the BVI, that blanket filing and auditing procedures are not suitable for all legal entities. As part of the OECDs acceptance of this view, a special ad hoc OECD group will be set up to review accounting and auditing procedure. The BVI will be fully involved in this OECD standards-setting exercise.

' The BVI also highly values the second element of a 'level playing field' between member and non-member OECD countries. This principle aims to ensure that the local economy is not disadvantaged by the OECD commitment. The BVI maintains that all countries must be prepared to commit to amending systems in parallel to secure worldwide consistency in financial services. The BVI has received assurances from the OECD Secretariat of its intention to see all member countries, who have so far abstained from the tax project, make the same changes to their financial systems by the same deadlines.

' Ralph T. O'Neal, Chief Minister and Minister of Finance, Economics and Development in the BVI commented: " Entering into this commitment is not an end to our engagement with the OECD on these critical issues - rather it is a beginning of a period of constructive engagement and continued dialogue on matters of critical importance to our economic viability. The BVI Government remains resolved to do whatever is necessary to ensure the international competitiveness and economic viability of these islands."

' Robert 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 BVI is also pleased to announce the signing of a new Tax Information Exchange Agreement with the United States of America on 3 April 2002. Whilst the BVI and the USA have cooperated to exchange information on criminal and regulatory matters since the Mutual Legal Assistance Treaty of 1993, this new Agreement is one of the first in expanding the USA's body of information exchange agreements across the world. The BVI has long held the view that cooperation with the USA and UK remain the cornerstone of its continuing success. This Agreement serves to demonstrate the strength of this feeling and the BVI commitment to financial services transparency.

' Robert Mathavious, Managing Director of the BVI Financial Services Commission, commented: "This agreement underlines our commitment to the ongoing need for information exchange. For the BVI, this is the natural extension of the many actions that have been taken in past years to increase the transparency of BVI systems and reduce the potential for abuse."'

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