The British Virgin Islands, determined that the territory should not find its way onto the Organization for Economic Cooperation and Development's list of so-called "uncooperative tax havens", has stepped up its campaign with the announcement of several measures aimed at ensuring the Islands will be recognised by the international community as a reputable and premier offshore financial centre. The desire to defend the Virgin Islands has been strengthened further still by its damaging inclusion in group III of the recent categorisation of offshore centres by the Financial Stability Forum (FSF).
All offshore jurisdictions are waiting with bated breath for the results of the OECD's extensive fact finding review of 49 targeted jurisdictions to identify those which it deems to have adverse consequences for the world economy through harmful tax competition. The Virgin Islands government has been in discussions with the OECD for some time and is striving to uphold the jurisdiction's reputation.
This week Chief Minister and Minister of Finance Ralph T O'Neal, addressing members of the Legislative Council, said 'It will not surprise Honourable Members that, acting through the Financial Services Department, this government has repeatedly reaffirmed to the OECD etc., commitment to cooperating internationally with all global efforts aimed at preventing abuse of the international financial system and at ensuring that all activities within the territory's financial sector are regulated to international standards.'
It must be said that the OECD has responded to criticism about its processes, particularly from Caribbean jurisdictions, by saying that while it still intends to publish a list of tax havens this month, it will not be used as a basis for coordinating defensive actions against the listed countries, but instead used as the starting point for drawing up a new second list of uncooperative tax havens, which will be published in June 2001. The OECD has said those jurisdictions, which, prior to June 2000, make a high level political commitment to eliminate all harmful tax elements from their regimes, would not appear on the list.
Mr O'Neal has welcomed this development but is aware that the Virgin Islands cannot afford to become complacent, and as a consequence, the jurisdiction plans certain measures to keep the OECD sweet. Firstly, O'Neal has agreed to an amendment to the Mutual Legal Assistance Treaty (MLAT) with the USA to include within its parameters access to information relating to criminal tax investigations and to eliminate the requirement for dual criminality.
Other measures would include the introduction of Compulsory Powers Legislation to provide for access to information within the Virgin Islands and a commitment to addressing the "opaqueness of IBCs" by requiring particulars of directors to be recorded at the Company Registry and restricting the mobility and anonymity attached to bearer sharers by requiring them to be deposited with licensed financial institutions. Mr O'Neal sees the proposals as going a long way to 'addressing the immediate concerns of the OECD...ironing out these issues will become the top priority for government within the next few months.'
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