Urgent legislation has been triggered after it emerged that up to 30 percent of companies registered in the Virgin Islands were on track to miss a deadline for submitting financial returns, Premier Dr. Natalio “Sowande” Wheatley said last week.
Firms could now have nine extra months to comply after the House of Assembly passed the BVI Business Companies (Amendment) (No. 2) Bill, 2024, on Oct. 29.
Dr. Wheatley said the changes were needed with “some urgency” as legislation passed in 2022 required every VI-registered company to file an annual financial return with its registered agent within nine months of its financial year-end.
‘Crucial step’
“This was a crucial step to ensuring transparency, accountability and adherence to global financial standards,” he told the HOA.
The premier added that companies with financial year-ends of Dec. 31, 2023, were required to submit their returns by Sep. 30, 2024.
“Failure to comply would trigger serious consequences for the company, such as the risk of being struck off or of being unable to obtain a certificate of good standing,” he said.
‘Concerned’
Given the stiff penalties, the premier added, the government was “concerned” about the compliance rates.
“Despite the importance of this mandate, a recent report submitted to the Financial Services Commission on Sep. 2, 2024, revealed a concerning statistic,” he said. “The report, based on data from our financial services sector, indicates that 25 percent to 30 percent of BVI-registered companies have not yet submitted their annual financial returns.”
The new bill, which now awaits assent from Governor Daniel Pruce, would allow the Financial Services Commission to grant extensions for companies from Oct. 1, 2024, according to the premier.
“This flexibility is essential given the volume of companies registered and the practical challenges associated with enforcing immediate compliance,” Dr. Wheatley said.
“This pragmatic approach will reduce the need for costly and time-consuming enforcement actions while still ensuring that companies meet their legal obligations.”
The premier added that the change was not a “form of leniency” for firms but rather a “necessary step” toward facilitating compliance.
“This approach provides locally owned companies with much-needed flexibility to comply with the requirements without facing immediate punitive measures,” he said.
‘Vigorous’ assessments
The premier also told the HOA that the returns are needed to comply with global transparency regulations as the BVI International Tax Authority “vigorously” assesses firms’ filings.
“It is critical that we take swift and decisive action to maintain our reputation as a well-regulated financial services jurisdiction,” he said.
However, Dr. Wheatley acknowledged that the measures were “onerous” for some firms.
“The evidence of the fact that it is somewhat onerous is the lack of compliance which has led to this amendment,” he said.
“It is a transition that had to be made. This extension of up to nine months is absolutely necessary and important to ensure that the requirements which have been imposed by previous amendments can be complied with.”
‘Here we go again’
Opposition Leader Ronnie Skelton expressed concerns about the impact on local businesses.
“All I will say is: Here we go again. We have a corkscrew on local businesses, and we are tightening it, turning it and twisting it until they all will disappear one day,” he said, adding, “This is going to be a problem for them. This thing is saying that the little company up the road, if their financials are not in … when time is up, they are going to be struck from the financial services register.”
Deputy Premier Julian Fraser, who crossed the floor of the House last month to join the government, also expressed reservations about the impact on local business and noted that he was supporting the legislation “grudgingly.”
Opposition member Lorna Smith, who Dr. Wheatley fired as financial services minister in October, said she backed the changes.
And Education, Youth Affairs and Sports Minister Sharie de Castro gave her support as well.
“It is something that is being done to assist businesses in becoming compliant, and so it is not something that we are putting on,” she said.
‘Quality’ businesses
The premier added that the VI is interested in being home to “quality” businesses.
“We will always have a financial services industry here,” he said. “And if we do not have the same amount of companies that we have had in the past, it is not necessarily a bad thing, because not all business we want here. We want quality business, and we want companies who we know will comply with their international obligations.”
The bill passed with amendments made during the private committee stage, but the nature of the amendments was not announced.
