Last week, the European Union removed the Virgin Islands from its blacklist of “non-cooperative jurisdictions for tax purposes” more than eight months after giving the territory the designation in February.
VI officials were quick to praise the move.
“We welcome the announcement that the [VI] has been removed from Annex I of the EU list, which reflects the current state of play in the [VI],” Deputy Premier Lorna Smith said in an Oct. 17 statement. “As a world-class international financial centre, the [VI] is committed to maintaining the highest international standards on transparency and regulation.”
The list
The EU placed the VI on the “Annex I” blacklist on Feb. 14 along with Russia, Costa Rica and the Marshall Islands. Following those additions, the list — which was established in 2017 — included 16 countries and territories. However, the VI government quickly pushed back.
Premier Dr. Natalio “Sowande” Wheatley and other officials argued that the EU’s decision was based largely on criteria that didn’t consider recent reforms in the territory.
For instance, one of the EU’s major benchmarks is the Organisation for Economic Cooperation and Development’s Global Forum Peer Review, which assesses compliance with international standards of transparency and exchange of information on request, they said.
Review
In the VI, the OECD Peer Review was launched in December 2021, and it covered a period stretching from 2016 to 2020.
This timeline meant the review didn’t consider more recent reforms, including amendments to the BVI Business Companies Act and related regulations that took effect on Jan. 1 of this year, officials claimed.
The territory therefore requested a supplementary review from the OECD Global Forum, which it subsequently received.
Black to grey
The EU Council said in an Oct. 17 press release that the VI was removed from the blacklist because it amended its framework on exchange of information on request.
Now, however, the territory is on the EU’s so-called grey list of “Annex II” jurisdictions that the organisation claims have not fully complied with all international tax standards but have committed to implementing reforms.
Moving forward, Ms. Smith said last week, the EU’s Economic Financial Affairs Council will reassess the territory in accordance with the OECD’s standard.
Next steps
The EU lists are updated twice a year using a monitoring process that screens countries and territories against international tax standards.
The next revision is scheduled for February.
In its latest update, the EU also removed Costa Rica and the Marshall Islands from the blacklist, but it added Antigua and Barbuda, Belize and the Seychelles, citing those jurisdictions’ alleged lack of regard “to the exchange of tax information on request.” Jordan and Qatar were removed from Annex II grey list last week for fulfilling their commitments by each amending a “harmful tax regime,” while Montserrat and Thailand were removed after fulfilling their pending commitments related to “country-by-country reporting of taxes paid,” according to the EU.
Now, there are 14 grey listed countries and territories, including the VI.