On 17 October 2023, the British Virgin Islands ("BVI") was removed from the European Union's ("EU") list of non-cooperative tax jurisdictions (Annex I) following a meeting of the bloc's Economic and Financial Affairs Council. A statement from the EU Council stated that the BVI “was removed from the list as it has amended its framework on exchange of information on request (criterion 1.2) and will be reassessed in accordance with the OECD standard. Pending this reassessment this jurisdiction has been included in Annex II.”
Annex II is the EU's list of jurisdictions which cooperate with the EU and have committed to implementing reforms.
Background
On 9 November 2022, the Organisation for Economic Co-operation and Development ('OECD') Global Forum on Transparency and Exchange of Information for Tax Purposes published its second-round peer review report which rated the BVI as 'partially compliant' – meaning that the BVI was added automatically to Annex I and on the "EU blacklist". However, this rating was assessed on the legal and regulatory framework in place as at 9 September 2022. It did not consider the legislative changes that the BVI was making to its regulatory framework and which would be in force in 2023.
The government of the BVI requested a supplementary review by the OECD Global Forum that would accurately reflect the BVI’s compliance with international standards. This supplementary review request was granted on 6 April 2023 and lead to the Council's announcement.
Legislative changes
The removal of the BVI from the EU blacklist of non-cooperative tax jurisdictions recognises the numerous legislative changes made in 2022 to its regulatory framework (including BVI Business Companies Amendment Act 2022 and BVI Business Amendment Regulations 2022). It reflects the hard work undertaken across government and the financial sector in the BVI in meeting the requirements set out by the OECD Global Forum.
Conclusion
The removal of the BVI from Annex I is very welcome news. As a premier international financial centre, the legislative changes taken by the BVI and recognised by the EU Council demonstrates the jurisdiction's commitment to meeting and maintaining the highest international standards on transparency, regulation and industry best practice.
For further details on this article or any other BVI related issue, please get in touch with one of the contacts listed.
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