Legislative proposals in the British Virgin Islands (BVI) intend to institute the BVI International Tax Authority (the ITA) as a fully-fledged independent government institution in the BVI with its own legal personality capable of having power to do all such things as are necessary or incidental to the performance of its functions.
The ITA was initially established within the BVI Ministry of Finance to administer cross border tax matters involving the BVI. It was designated by the Financial Secretary as the competent authority (the Competent Authority) under the Mutual Legal Assistance (Tax Matters) Act 2003 (the MLAT) to perform these functions. Under the MLAT, the Financial Secretary is designated as the Competent Authority. Under the MLAT framework, the functions of the ITA includes negotiating tax information exchange agreements and other arrangements in relation to tax matters, dealing with all practical aspects of tax information exchange (upon requests, automatic, spontaneous), continuing to develop the framework within the BVI for the effective exchange of information, ensuring that the BVI is fully compliant with the international standards of transparency and exchange of information for tax purposes and that the Government of the BVI fulfils its obligations under tax exchange information agreements it has entered into.
While rating the BVI as Largely Compliant in its Supplementary Peer Review Report, Phase 2: Legal and Regulatory Framework (the Peer Review), the Global Forum did recommend that the BVI should take ensure that it responds to all exchange of information (EOI) requests in a timely manner and that the BVI should take a more tailored approach in handling EOI requests in circumstances which are not encountered on a day-to-day basis and which are likely to result in longer response times. It is with this in mind that the BVI has made a further commitment to the international standards on tax transparency and EOI and introduced The International Tax Authority Act 2017 (the Bill) under which the ITA will no longer operate as a department of the Ministry of Finance of the Government of the BVI. Instead, when the Bill is passed into law, the ITA will have a semi-autonomous character and it will be a statutory body with quasi-judicial authority. The scope of the proposed functions of the ITA as outlined in the Bill cements the BVI’s commitment to the recommendations made under the Peer Review.
Since 2009, these standards have evolved and new standards on automatic exchange of information have been introduced. As these standards continue to evolve and change, so too must the machinery required to cooperate on an international level. The BVI Government through the passage of the Bill in the Legislature seeks to ensure that such cooperation is handled in the most efficient and time sensitive way and that the ITA is adequately staffed to do so. In order to better achieve these standards, it was determined that the ITA would be best served by being a statutory body, removed from the main day-to-day Governmental operations and systems.
Some of the key features the Bill is expected to introduce include:
- establishment of the ITA as a body corporate, setting out the functions of the ITA and seeking to equip the ITA in order to ensure that the BVI is better able to adhere and respond within a time-efficient manner to international standards in relation to cross border tax matters
- implementation of a Board of Directors (the Board) to govern the affairs of the ITA. The Board will be made up of five members, namely, the Financial Secretary (who will act as Chairman), the Attorney General, the Managing Director of the BVI Financial Services Commission (the FSC), the Director of the ITA and the Director of the Financial Investigation Agency (the FIA)
- the ability of the ITA to issue guidelines in relation to its functions after consulting with relevant agencies and any such guidelines are required to be available for inspection by all relevant persons, entities and legal or other persons
- facilitating secondment of public officers from the FSC, the FIA or any department of the Government in general and provides the framework and reporting obligations in relation to such secondments
- the provision of immunity to the ITA and its officers from suit in relation to the performance of their functions, duties and powers under the Act and protects persons who provide information to the ITA from criminal or civil liability
- provisions for the confidentiality of any information that any person obtains as a result of his or her connection with the ITA
From an administrative perspective, the Bill:
- requires the Director of the ITA to prepare and submit an annual report to the Board by 30 June each year which should detail the work of the ITA for the previous year
- allows the ITA to collect fees in relation to filings made under FATCA and the common reporting standards and will also have the power to impose administrative penalties, such fees and penalties will then form part of the operational funds and resources of the ITA and the ITA is required to prepare an annual budget that must be submitted to Cabinet for approval
- affords the ITA the power to borrow money in certain conditions and the ITA is required to keep proper accounts and other records of account and to prepare a statement of accounts for each financial year.