Robert Mathavious Urged To Reconsider Information Exchange Proposal

by Amanda Banks, Tax-News.com, London

05 February 2002

According to a report in this week's Island Sun, there are concerns in the British Virgin Islands about the repercussions of signing an information exchange agreement with the United States in order to facilitate the IRS's hunt for tax evaders.

The authorities in BVI are said to be considering the possibility of signing an information sharing agreement with the US, and with Antigua and Barbuda, the Bahamas, and the Cayman Islands, already having signed such agreements, the jurisdiction's financial services sector is waiting, somehat apprehensively, for the other shoe to drop.

Financial services providers in the British Virgin Islands clearly recognise the need for more strict scrutiny and enhanced regulation in the wake of the September 11 terrorist attacks. However, they argue that the OECD's shift of focus from tax harmonisation to agreements which make it easier for the IRS to pursue tax evaders is a thorny issue, and one which should be given a great deal more consideration.

The BVI Island Sun reported that a local registered agent recently wrote to the jurisdiction's Director of Financial Services, Robert Mathavious, to urge him to reconsider the proposals, warning that: 'The outcome [will be]... a burden for the country with no compensation or benefit to balance the equation and the potential damages to the BVI financial services sector.'

The law firm pointed to the many legislative changes affecting IBC formation as evidence of the jurisdiction's willingness to crack down on money laundering and taxation, concluding that:

'The last thing the BVI wishes is to tarnish its reputation as an offshore financial center...However, we do not need pressure of elephantine proportions to keep our house clean, we are quite capable of doing so.'

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