Beneficial Ownership And Economic Substance Requirements Make Progress

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From March this year the COVID-19 pandemic has dominated the attention of the local public and government, but Premier and Minister for Finance Hon. Andrew Fahie explained that the pending topics of beneficial ownership and Economic Substance remains on the radar.

In an update on both matters during the House of Assembly on 21 July, the Premier confidently noted that both issues were being handled. He told legislators: “Our international regulatory regulations have not been removed or reduced we must therefore not take the opportunity to become complacent.”

The Economic Substance requirement is aimed at addressing the European Union’s concern that offshore jurisdictions’ tax systems facilitate artificial offshore structures that do not have real economic activity. Therefore, the EU mandated that financial services jurisdictions facilitate mechanisms for the various entities to prove substance.

In providing insight on how the Territory was progressing along this area Premier Fahie told the House of Assembly that the BVI commenced a milestone part of the requirements. “We are embarking on a very significant period in the BVI Financial Services landscape. This month marks a significant step for economic substance filing. As with anything new, this may take some getting used to for all of us.”

The Minister of Finance also explained that the need to provide substance is not a cause for concern for the BVI as was previously thought. “While many saw the European Union’s Economic Substance initiative as a major threat we have successfully negotiated regarding that and are now fulfilling the data collection requirements it brings,” Hon. Fahie explained.

Beneficial Ownership

Even the previously worrying matter of having to reveal the owners of companies registered in the Territory is said to be not so scary as the Minister for Finance explained that the BVI is also ready to comply with this UK requirement and the EU request for substance.

Hon. Fahie told the House of Assembly, “Utilising the Beneficial Ownership Secure Search system (BOSSs) platform has enabled us to also rise to meet EU standards on data collection with efficiency and effectiveness.” The Government signed an exchange of notes agreement with the United Kingdom Government in April 2016.

“The BOSSs system is built to ensure that the Territory can efficiently exchange that information concerning the exchange of notes…The beneficial ownership information in the system will also be available to other authorities in the Virgin Islands to ensure that they are able to meet their international obligations. Importantly, the system will not be accessible by the public,” Hon. Fahie further explained.

Hon. Fahie told the House of Assembly that Government recently, in a letter to the Government of the United Kingdom, reiterated its continued commitment to the exchange of beneficial ownership information with the UK under the Exchange of Notes on Beneficial Ownership signed in 2016.

“We also took the opportunity in the letter to highlight that the BVI continues to meet and adhere to the highest international standards as a responsible, cooperative, and quality financial centre,” Hon. Fahie added

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