The BVI tax information exchange system is largely modelled on international principles developed by the Organisation for Economic Cooperation and Development and is split into two types of regime. The 'automatic' exchange of information regime requires financial institutions to exchange formulistic data about the accounts of foreign taxpayers, while the 'on request' regime deals with specific and potentially in-depth investigations into the affairs of named taxpayers with offshore or international holdings.
A recent Court of Appeal ruling provided guidance on directors' powers after considering whether a fresh issuance of shares by directors which altered the balance of voting power between the shareholders was done for a proper purpose. The court held that directors should not issue shares in a manner that could affect the balance of power between groups of shareholders or create new majorities, irrespective of whether the old or new majority have a proprietary interest in the fund.
Interest in the setting up and distribution of initial coin offerings (ICOs) in the British Virgin Islands and other offshore locations has increased rapidly during 2017, and this is expected to continue. No ICO or blockchain-specific rules or guidelines have yet been issued by the government or regulator; however, there are several important issues for parties in the British Virgin Islands to consider, including the key laws and regulations surrounding the issue.
The ability to continue a foreign company as a BVI company or to continue a BVI company as a company under the laws of another jurisdiction quickly and seamlessly is just one example of the many flexible features of the Business Companies Act 2004. This is particularly useful in the context of corporate reorganisations, and counsel should be aware of the process and requirements for continuations and discontinuations.
The government recently enacted the Labour Code (Work Permit Exemption) Order 2017, which excludes certain categories of people from the need to obtain work permits. In particular, the exemption for directors visiting the British Virgin Islands for board meetings supports the territory's position as the leading corporate domicile in the global economy.
'Forum shopping' is the practice of choosing the most favourable jurisdiction in which to bring a claim. In principle, there is nothing wrong in seeking to have a case heard in the forum which is most favourable to the client. However, it can lead to some fierce jurisdictional battles, particularly in insolvency, where the choice between debtor and creditor-friendly procedures can be stark. The Commercial Court has been wrestling with this situation over the past 10 months.
As the world's leading incorporation vehicles, BVI companies are listed on exchanges and conduct business around the world and may therefore expect to be occasionally involved in activist campaigns or other challenges from shareholders. However, many investors and their advisers may be less familiar with BVI company law than their domestic legislation.
The government recently enacted two measures regarding the cruising permit fees that each charter boat must pay while carrying paying passengers in the British Virgin Islands. Under the Cruising Permit (Amendment) Act, boats will now be classified as either home-based or foreign-based charter boats, with set fees for each classification. The Statutory Rates, Fees and Charges (Amendment of Schedule) Order 2017 confirms these fees for internal government purposes.
The government recently enacted a measure regarding the fees payable for work permits in the British Virgin Islands. The amendment order replaces the employee flat fee system with an incremental calculation based on salary bands, which now generally assume a higher gross salary. It also replaces most exceptions to the previous scheme, keeping only those for domestic workers.
The British Virgin Islands has enacted legislation to implement a networked database of beneficial ownership interests in companies incorporated or domiciled in the jurisdiction. The Beneficial Ownership Secure Search System aims to ensure that the British Virgin Islands can comply with its obligations under the UK Exchange of Notes Agreement, which modernises the way in which BVI competent authorities may gain access to beneficial ownership information of BVI companies.
The British Virgin Islands is expected to undergo its fourth round of mutual evaluation by the Caribbean Financial Action Task Force in 2018, based on the Financial Action Task Force's International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. In preparation, the Financial Services Commission has commenced a preliminary exercise to ensure that relevant persons have complied with the international standards requirements.
The BVI Financial Services Commission recently signed a multilateral memorandum of understanding between members of the Group of International Financial Centre Supervisors. The objective of the memorandum is to ensure clarity and effective regulatory cooperation between the authorities responsible for supervising the banking sector in signatory jurisdictions.
The British Virgin Islands recently adopted new guidelines for communication and cooperation between courts in cross-border insolvency matters. The guidelines are designed primarily to enhance communication between courts, insolvency representatives and other parties in the context of global restructurings and insolvency. As a result of the increased efficiency, it is hoped that stakeholders will see a reduction in delays and costs.
The Financial Services Commission Act 2001 was recently amended. The key revisions relate to the routine publication of fines and penalties levied by the Financial Services Commission (FSC). For example, the FSC now has the discretion to determine the types of case where publication of the enforcement may be restricted.
The British Virgin Islands has long been hailed as a leading offshore jurisdiction for wealth management and asset protection among Latin American high-net-worth families and individuals. The outcome in a recent case augments the credibility of the British Virgin Islands as a jurisdiction in this regard. The case also highlights the strengths of the BVI-only Virgin Islands Special Trust Act trust structure.
Schedule 2 of the Anti-money Laundering and Terrorist Financing Code of Practice 2008 sets out a list of jurisdictions with laws and regulations similar to those of the British Virgin Islands. The principal advantage of relying on Schedule 2 is that business coming from recognised jurisdictions will generally attract the application of reduced client due diligence measures.
New legislative proposals aim to establish the BVI International Tax Authority (ITA) as a fully fledged independent government institution, giving it autonomy over the performance of its functions. Key features of the bill include the implementation of a board of directors and the provision of immunity to the ITA and its officers from suit in relation to the performance of their functions, duties and powers.
The government recently enacted two revenue-increasing measures: the Customs Management and Duties (Amendment of Schedule 4) Order 2016 and the Hotel Accommodation (Taxation) (Amendment) Act 2016. The order raises the duty on alcohol and tobacco, while the act seeks to increase the existing hotel accommodation tax to bring the British Virgin Islands into line with other premier holiday destinations in the Caribbean, although the rate is still less than that in many US destinations.
There have recently been three judicial appointments to the Commercial Court designed to increase the capacity of the court in 2017. The appointments should provide further momentum and expertise to the BVI Commercial Division and enhance the court's ability to deal with complex cases promptly and effectively.
The Financial Services Commission recently published a guide to ensure that money service business providers and the wider industry are protected by helping to sensitise various stakeholders on matters surrounding money laundering, terrorist financing and other forms of financial crime. The guide touches on customer due diligence, the implementation of internal controls, suspicious activity reports and record keeping, and outlines relevant legislation.