The Government of the Virgin Islands and the Government of the United States concluded its negotiations On March 6, 2014, and initialled the final text of an Inter-governmental Agreement (IGA) in respect of the US Foreign Accounts Tax Compliance Act (FATCA), paving the way for its imminent signing and implementation in Territory.
The initialling of the agreement comes after several months of dialogue with the US Treasury in which the BVI Government negotiated and received various exceptions for relevant entities such as Non-Profit Organisations and Pension Plans and their accounts.
Upon the signing of the IGA, Foreign Financial Institutions (FFIs) in the BVI that are required to comply with US FATCA will be able to do so in a more streamlined way, thereby reducing the compliance burden on those institutions. Under the IGA, those FFIs will report certain information on US account holders to the BVI International Tax Authority who would then automatically exchange the information with the Government of the United States.
Premier and Minister of Finance, Dr. the Honourable D Orlando Smith, OBE said, “The initialling of the FATCA IGA is another important signal of BVIs commitment to global standards on transparency.”
He added, “BVI has long been a strong and willing partner with well-developed systems and laws that facilitate exchange of information for regulatory, law enforcement and tax purposes. We are therefore pleased to continue to advance the BVI in tandem with the emerging standards on tax transparency.”
Premier Smith further remarked, “It was important for BVI to dialogue with its industry partners and client base in order to ensure that their interests were considered in our negotiations and I am therefore pleased that we have delivered a good result which strengthens our partnership and the integrity and compliance of the industry.”
The BVI is expected to put into place shortly the final legal and administrative procedures to facilitate, as well as issue guidance notes on, the implementation of the IGA.
The BVI continues to show its commitment to cooperation in these cross-border tax matters, including committing to the Common Reporting Standard (CRS) that was developed by the OECD.
The conclusion of negotiations with the United States on a FATCA Agreement is another step in the direction that shows this Territory's willingness to cooperate.
In addition, the BVI has signed a similar agreement with the Government of the United Kingdom, and has also committed to the Multi-lateral Convention on Mutual Administrative Assistance in Tax Matters, which was extended to the BVI from the United Kingdom and over the years we have signed 25 Tax Information Exchange Agreements.
The BVI recognises that as a well-established international finance centre it plays an important role in world trade and commerce. As such, it has been a willing partner regarding its international tax obligations.
The steps taken and others to be taken have demonstrated the BVI's strong commitment and determination to promote global tax transparency. Therefore, when the need arises for dialogue on the issues of tax transparency and global cooperation, BVI will continue to do so.