The government of Netherlands has started series of consultations, planning to review country’s tax treaty policy and make a list of low-tax jurisdictions to apply enforced incoming controlled foreign company (CFC) rules.
The CFC rule will be introduced by Netherlands from January 1, 2019. It will be in line with the requirements of the EU Anti-Tax Avoidance Directive, and will target low-taxed CFCs – that means the companies registered in the jurisdictions with statutory tax rate of less than 7 per cent. British Virgin Islands are among the countries which are to be placed on the list, and to which the new rules will apply. According to the press release of the Ministry of Finance, the list will be updated annually. Dividend, interest and royalty payments to BVI and other listed jurisdictions will be subject to the headline corporate tax rate in the Netherlands, which is currently 25 per cent.
The news agency published information about the previously undisclosed complex web of financial transactions, which involved the transfer of money from Russia and Switzerland to the British Virgin Islands, Bangkok and New Jersey. The suspicious money transfers involved the participants of Trump Tower Russia meeting in June 2016. According to the documents, a billionaire real estate developer Agalarov close to both Donald Trump and Vladimir Putin used offshore accounts to filter money.
The investigation of federal law enforcement officials is focused on two sets of transactions. The first one was short time after the meeting, when a British Virgin Islands company Silver Valley Consulting controlled by Agalarov sent more than US$19.5mln to his account at a bank in New York. Some days later, the BVI company made a wire transfer through its Swiss bank account for a little more than US$19.5 mln to billionaire’s account in the US bank.
In total, Silver Valley made nearly 200 transactions for US$190mln between 2006 and 2016, and some of them looked suspicious. It was found out by US bank examiners that Silver Valley received nearly US$900,000 in 2012 from a person investigated for tax evasion in the past. Next year, the BVI company received two payments from an aviation firm whose shareholder was involved with a suspected money laundering scheme. All the transactions came to light after law enforcement officials asked financial institutions to look for suspicious deals that could be connected to Trump-Russia investigation.
Premier African Minerals Limited announced that trading of its ordinary shares on the AIM stock exchange had been temporarily suspended from July 2, 2018, pending publication of the company’s annual report and accounts, which should have been published by June 30, 2018.
Prior to the temporary suspension, the BVI-incorporated mining and natural resource development company announced the decision to fully impair RHA Tungsten Mine, and to make the corresponding adjustments to the final draft accounts, which are now subject to final technical review and sign-off by the company’s auditors. The company expects to publish shortly the annual report and accounts for the year ended 31 December 2017.
The British Virgin Islands Financial Services Commission has issued advisory warning concerning Pyramid Scheme Frauds and other related investment scams. In the warning, pyramid scheme is defined as fraudulent money-making scheme based on non-sustainable business model that involves the exchange of money primarily for enrolling other people, without legitimate product or service. While legitimate trading schemes are based on valuable goods and services, illegal pyramid schemes focus on recruiting more and more investors. The members who join the group may get profit by signing up new members.
The deals of this kind are usually scams even if they look like a form of investment opportunity, for example, forex trading. It is a form of financial fraud. The commission provides more information on these fraudulent schemes, and how to avoid becoming their victim, on its website www.bvifsc.vg.
The amendment to the Sanctions and Anti-Money Laundering Bill, which was strongly opposed by the Organisation of Eastern Caribbean States (OECS), still was accepted by the UK government. According to the new provisions to the legislation, British Overseas Territories will be forced to issue public registers of beneficial owners of companies registered in each jurisdiction. The public registers should be developed by the end of 2020.
Earlier, the OECS noted that the issue of public registers is a matter for international financial regulation, led by the Financial Action Task Force (FATF). It does not require public register but that beneficial ownership information is accessible and verified by law enforcement or other competent authorities. Also, the BVI earlier stated that it will comply with such a requirement if it becomes as international standard. It also noted that the UK Register, while being public, is not verifiable, so it does not technically meet FATF requirements.
The OECS said in a statement in the beginning of this week: “While we recognize and respect the sovereign right of the UK to determine its national legislation, our concern centers on those provisions which are discriminatory to the BVI and which contravene the constitutional arrangement between the BVI and the UK by which financial services are formally entrusted to the democratically elected BVI government when the new constitution was agreed in 2007”.
A number of public statements were issued by the British Virgin Islands Financial Services Commission to protect the public interest, and the interests of any customers or creditors of Kerford Investments Limited, DOMINION S.X. Ltd., formerly known as Qualiom Financial Ltd., BNRoptions Ltd, and BVI Business Company Bgo group Ltd which operated the website AYAFOREX at http://ayafx.com. The Commission considered it necessary to warn the public that these companies have never been licensed or regulated by the FSC to carry on any type of financial or investment business services in or from within the Territory.
For Kerford Investments and DOMINION S.X. Ltd., the Commission issued an order to immediately cease carrying on investment business in the BVI, as these BVI-incorporated companies conducted investment business online without having obtained the requisite licence from the FSC and in breach of legislation.
The BVI FSC issued public statement pursuant to Section 37A(2) of the Financial Services Commission Act, 2001, to protect the public interest and the interests of any customers or creditors of the company known as Trade Time Investment, to make the public aware that this company has never been licensed or regulated by the Commission to carry on any type of financial services business.
Trade Time Investment has been connected to the website www.tradetimeinvestment.com which facilitates online investment business activities, and has been circulating a false Investment Business Licence purporting to be issued by the British Virgin Islands.
The British Virgin Islands Financial Services Commission has issued the public statement regarding Smiths Gore and Son’s Reserve Loan Company, in order to protect the interests of the public and of any customers and creditors of this company, and to inform that it has never been licensed or regulated by the Commission to carry on any kind of financial services business.
Smiths Gore and Son’s Reserve Loan Company has been circulating a forged Investment Business Licence which was falsely represented as being issued by the Financial Services Commission. The website to which the loan firm has been connected, www.smithsgoreloan.com, purports to provide online loan services to the public. Also, the company has not been actually registered in the territory of the British Virgin Islands.
The companies registered in Guernsey, Jersey, the British Virgin Islands and the Isle of Man are revealed to be the biggest overseas buyers of property in East Anglia. Since 2015, offshore firms from these tax havens have spent more than £400 million on property in Norfolk and Suffolk. The real number may be much higher as only one third of the 300 properties sold have a sale price on the Land Registry.
The properties sold in Norfolk and Suffolk counties are prime offices and new homes, as well as industrial estates and shops. Purchasing through offshore firms makes it difficult or even impossible to find out the ultimate owner, and there is a legal loophole allowing the tax to be reduced by thousands of pounds when the property is going on sale. In 2016, the UK law was changed making sure non-UK residents are taxed on profits from dealing with UK properties, but still offshore companies do not pay capital gains tax on commercial property sales.
Norfolk and Suffolk properties bought by the British Virgin Islands companies include Wickes store in Norwich bought for just under £6m in March 2017, by Dakota Properties Limited, and it seems not possible to find who is behind this BVI firm.
Another example is the building in the city centre, a prime retail spot, which was bought for for £2.7m by the BVI-based company Balavan Limited. The registered address of the company is Mossack Fonseca, the Panamanian law firm known for Panama Papers data leak.
The EU has released blacklist of 17 countries which are said to be tax havens not doing enough to cope with offshore avoidance schemes. Among these countries there are the United Arab Emirates, Bahrain, Tunisia, Panama, South Korea, Macau, Barbados, and some others. They will have restrictions in receiving EU funding and investments, and maybe the sanctions of the EU member states.
Some other jurisdictions, among them the British Virgin Islands, Bahamas, Antigua and Barbuda, also failed to comply with the EU standards, but got a temporary pass because they severely suffered from this year’s hurricanes and may not currently have the needed infrastructure. According to the EU statement, they have to deal with the problems until early 2018, not to be blacklisted.
The list was made based on three main components: tax transparency, fair tax competition and implementation of Base Erosion and Profit Shifting (BEPS), which is a way of battling tax avoidance created by the OECD. It is stated that the goal of the list is to ensure that the EU partners adhere to the same tax standards as the European Union itself.