BVI Continues Fight To Defend Financial Services Industry

At the close of business on the 29th February 2000, there were 371,894 International Business Companies (IBCs) registered in the British Virgin Islands, according to figures released by the Ministry of Finance.

This figure, however, does not represent the number of companies that are presently in good standing, as over 16,000 companies have been dissolved to date. "Additionally, a similar number of companies were struck off the register for non-payment of licence fees, but these can generally be restored at any time," according to Chief Minister and Minister of Finance the Honourable Ralph T. O'Neal. He provided the latest update on the industry during last Friday's sitting of the Legislative Council, in response to questions from Territorial Representative Hon. Ronnie Skelton of the National Democratic Party.

Chief Minister O'Neal said the total number of IBCs incorporated since 1st January 1999 is 73,827. He said this figure is up to the close of business on the 29th March 2000. Of this figure, 54,059 were incorporated in 1999; 7,919 in January 2000; 5,782 in February 2000 and 6,073 were incorporated from March 1st-29th, 2000. "In terms of percentage of market share, no organization exists which compiles such data. It was 'guestimated' some years ago, that the BVI boasts some 40% of the market share, but this information is unconfirmed and remains so," the Finance Minister told the House. Hon. Skelton's second question related to the government's position on the Organization for Economic Cooperation and Development (OECD) Harmful Tax Initiative and what effect this initiative will have on the territory's revenue.

The Chief Minister noted that there will no doubt be, and may already have been, fallout of business, particularly from clients based in the OECD countries themselves. He said the BVI government is most concerned that any fallout is kept to a minimum. "I remain convinced, Mr. Speaker, that the territory has among its most loyal clients, those in the Asia-Pacific region, who account for the majority of our business," he declared. But he said notwithstanding the potential impact, this initiative is over a year old and the impact on revenue has been minimal, as revenue continues to grow in this area. Hon. O'Neal said government couldn't at this time give any indication on the way forward. "Many of the initiatives seem to be included by the OECD as they go along; timeframes are sometimes not met and goal posts and methodology shift often; negotiation appears to be our strongest weapon at this time," he stated.

The BVI leader said government's position is one of cooperation. "To this end, the Director of Financial Services is attempting to engage the OECD in dialogue in an effort to indicate what level of cooperation the territory will be able to consider without, at the same time, jeopardising the viability of the financial services sector". The territory is also negotiating with the European Union, the G7 Countries, the United Nations Committee on Harmful Tax Initiatives, the Egmond Group and any other organizations involved in this struggle to protect the financial services centre. The At Large Opposition MP further questioned whether the BVI was in this fight with the OECD alone or whether the territory has the assistance of the British government and the other Overseas Territories.

"Mr. Speaker, as far as I know, we have the full assistance and cooperation of the other Dependent Territories and even independent countries. We have full cooperation from the Foreign and Commonwealth Office. I would hope that the British Treasury is also cooperating, but as you know, the U.K is bound up with Europe and it's a matter of weighing the territories against the interests in Europe and they'll have to strike a balance between us," Chief Minister O'Neal explained.