The British Virgin Islands (BVI) has been removed from the European Union (EU) list of non-cooperative jurisdictions for tax purposes on October 17th, 2023.
The EU press release states: “British Virgin Islands 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.”
This is a welcoming change that directly reflects the progress and hard work done by the BVI to meet the international standards set out by the OECD Global Forum regarding the exchange of information on request. The BVI’s delisting was preceded by the Global Forum granting the BVI a supplementary review on 6 April 2023, see here.
Background to the listing
On 9 November 2022, the OECD Global Forum published its second-round peer review report on the BVI which downgraded the jurisdiction’s rating from ‘largely compliant’ to ‘partially compliant’. A rating below ‘largely compliant’ means a jurisdiction is automatically added to the European Union (EU) List of non-cooperative jurisdictions for tax purposes.
The ‘partially compliant’ rating given to the BVI covered the period from 1 March 2016 to 30 June 2020 for the exchange of information requests received (including a ‘block period’ from 1 September 2017 to 31 December 2018 due to the impact of Hurricane Irma) and assessed the legal and regulatory framework in place as of 9 September 2022.
Critically, the rating did not consider the legislative changes that were put in place in 2022 (including BVI Business Companies Amendment Act 2022, and BVI Business Amendment Regulations 2022) and which came into force on 1 January 2023.
Steps taken to remove BVI from the list
Immediately after the OECD Peer Review was published, the BVI Government requested a ‘supplementary review’ that would more accurately reflect the BVI’s current legislative status. This was granted on 6 April 2023.
The BVI is constantly implementing changes to strengthen its systems whennecessary. It is considered an early adopter of international agreements to combat financial crime and promote the exchange of information.
BVI Finance announced in their communication: “We remain steadfast in our belief that robust yet practical regulation alongside compliance with the highest international standards is good for business. We will continue to protect and promote the reputation of the BVI as one of the world’s most respected and trusted financial centres.”