The International Tax Authority will finally be fully staffed when another six employees join the ballooning department to help it handle the tax information requests that have flooded in since 2010, Director Latoya James said in a recent hearing before the Standing Finance Committee.
They are expected to join the department in the middle of this year, bringing the total staff up to 35, which was the level the director requested two years ago, Ms. James said, according to a recently released report on closed-door SFC proceedings held in November and December.
The ITA is responsible for responding to tax information requests from foreign revenue-collection authorities.
Staffing has been a concern for the agency for years.
Last year’s SFC report also detailed its staffing problems, noting that as of November 2020, the ITA had been able to fill only 13 of the 35 positions it announced as vacant the previous year, despite tax information requests continuing to pile up.
Ms. James also reported similar problems when she appeared before the committee in April 2019, telling the SFC that the authority lost several staff members in 2017 and had been unable to replace them due to “certain issues.” At the time, she reported a staff of 10.
Meanwhile, requests for tax information have skyrocketed since 2010 and led to the agency being understaffed and out growing its space, Ms. James said in April 2019.
In the most recent SFC meeting, she also listed other extra work that has piled up for the agency over the years.
Besides economic substance, the ITA must now process requests related to the Common Reporting Standard, country-by-country reporting, exchange of information, and BVI Financial Accounting Reporting Systems.
These duties have all led to more work and a need for more staff, she explained.
“All of these matters have a compliance element to them, which means that the compliance department has an obligation to monitor the entities that fall within those categories,” she said.
Economic substance fees
She also revealed that the ITA has been looking at a different approach to fees for local VI companies related to the economic substance requirements that took effect in 2019.
A local company would still have to have a registered agent under the new approach, she said, but the ITA plans to review the additional $400 economic substance fee for local businesses.
Opposition member Julian Fraser (R-D3) said he was happy the ITA was taking this action. He said the fee is more expensive than simply hiring an agent, and he called it “unnecessary and a burden.”
Mr. Fraser asked why local companies need a registered agent to prove they have economic substance in the VI.
“Can some other document be prepared so that it would eliminate the payment to an agent?” he asked, according to the SFC report.
Ms. James responded, “Because of ES in particular, we know that these companies are here operating and they actually have a trade licence; the burden on local companies would not be the same as it would be for an international company.”
The changes will “hopefully” be communicated to local companies by the end of 2022, she said, according to the SFC report.
Mr. Fraser inquired how the information would be disseminated, and Ms. James replied that representatives of local companies would file directly with the ITA electronically.
“They would simply be required to provide the information through the declaration that includes the trade licence and any other information to show that they are actually operating in the VI,” the SFC report paraphrased her as saying.
‘Gift on a platter’
Calling the economic substance legislation a “gift on a platter” from the European Union, Mr. Fraser asked how the ITA can help capitalise on it to raise revenue.
“The only people who have benefitted from that so far are the registered agents,” he said. “I have not seen this country do anything, as far as I can see, to capitalise on the ES. As far as revenues being brought into the territory, it is forcing those companies to have substance in the territory. It is a shame.”
Deputy Premier Dr. Natalio “Sowande” Wheatley said he was “grateful for the progress that was made as it relates to staffing and new accommodation” at the ITA, the report stated. He also mentioned that a representative from the Organisation for Economic Cooperation and Development had praised Ms. James’ directorship.
“We are pleased that the work is being done,” Dr. Wheatley reportedly said.