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.
In the end of last week the US-based International Consortium of Investigative Journalists (ICIJ), which released Panama Papers last year, made public the Paradise Papers, a leak containing over 13 million documents being sifted through by journalists in more than 67 countries. In particular, the papers revealed information about top companies and dignitaries in the UK who avoided taxes using offshore tax havens. The new information on tax avoidance was discussed by EU finance ministers during the regular talks in Brussels, and some officials urge EU member states to rapidly take measures, among them adopting a European tax haven blacklist.
Similar to the Panama Papers, the Paradise Papers show the secret ways how multinational companies and rich individuals cut taxes by shifting their profits offshore, with the help of accountancy firms. There was also LuxLeaks scandal which revealed in 2014 that Luxembourg, with European Commission President Jean-Claude Juncker as prime minister, gave companies huge tax breaks. In all these cases, billions of profit were legally diverted from taxation, using such offshore jurisdictions as the British Virgin Islands, especially known from Panama Papers leak.
As a result of these scandals, the EU ministers are due to make an official list of unwanted tax havens in December 2017, whittling down an initial list of 92 countries finalised last year. About 60 countries have been warned by EU that their tax policies may be problematic, and asked to provide further information before 18 November deadline.
BVI-registered mining and exploration group Polo Resources Limited announced on 18 October, 2017 that it did not finish the appointment of a replacement nominated adviser by 19 October 2017, as it is required by the London Stock Exchange. As a result of this, the Exchange will suspend the BVI company on 19 October 2017. The company will seek the replacement adviser, and inform its shareholders in due course.
This news followed the announcement of Polo Resources on 11 October, and London Stock Exchange’s announcement on 10 October where the company was notified that the London Stock Exchange decided to remove the status of the Company’s nominated adviser, ZAI Corporate Finance Limited on 19 October 2017 for failure to meet the Exchange’s continuing eligibility obligations. The BVI company is required to find another nominated adviser by 20 November 2017, to avoid cancellation of company’s shares trading on AIM.
It became known that Wintris, an offshore company registered in the British Virgin Islands and owned by the wife of former Primer Minister of Iceland, failed to pay taxes in Iceland for a period of several years. The existence and ownership of the offshore company was made public last year, due to the Panama Papers, and resulted in the resignation of country’s Prime Minister.
Wintris was founded shortly after Anna Sigurlaug Pálsdóttir acquired a prepaid inheritance from her father. Iceland’s Prime Minister had a 50 per cent stake in the company, worth over 1 billion EUR 8 million, which he sold to his wife for $1 shortly after becoming a member of parliament in 2009.
One month after the existence of the company and the couple’s ownership of it was made public, the letter was sent by their attorney to the Director of Internal Revenue, with request to correct their tax returns from 2011 to 2015, and recalculate the charges. The letter’s claim that Wintris may not have paid taxes according to law is in contradiction with couple’s public statements that the company had always paid taxes correctly.
The public ruling made last week shows that for several years taxes were not properly paid for the assets held by Wintris and so the financial information provided by former Prime Minister was not accurate.
Transparency International UK has published a report informing that London properties are being purchased anonymously through companies. The organisation investigated the cases, and found that more than third of properties sold in a new Kensington and Chelsea development areas were purchased through anonymous companies, many of which registered in the British Virgin Islands.
Transparency International said that the UK Government should require to disclose property ownership, to make sure that taxes are collected and that the funds used to acquire UK property are from legal sources.
BVI FSC issued public statement regarding the company named Anmaric Enterprises Corporation, to inform the public that it has never been licensed or regulated by the Commission to carry on any type of financial services business in the jurisdiction.
Anmaric Enterprises Corporation was incorporated in the BVI in 2014 and connected to the website http://anmaric.com which was used to conduct investment business online. Meanwhile, the company has never obtained the license for this kind of activities from the FSC.
The British Virgin Islands Financial Services Commission issued public statements concerning the companies named E-Crypto Trade & Finance Group, Inc. and ZAR Solutions Limited, in order to protect the public interest, and the interests of any customers or creditors of these companies.
The commission informed that E-Crypto Trade & Finance Group, Inc. has never been incorporated in the jurisdiction, or received any license by the FSC to carry on any type of financial services business in or from withing the BVI. E-Crypto is circulating false certificate of incorporation and is soliciting investment business without the required authorization and licence.
The second company, ZAR Solutions Limited, has never been licensed or regulated by the Commission to carry on financial services business in the British Virgin Islands. It was incorporated in the jurisdiction on 21 July 2014, and is believed to conduct online forex trading and other investment related business without having the requisite licence from the Commission.
According to the new report by British company Capital Economics, the assets held offshore in the BVI jurisdiction are worth US$1.5 trillion, twice more than the 2010 statistics of the International Monetary Fund. Two thirds of the BVI-registered companies are for corporate structuring, meaning they are used for tax planning purposes.
By the Capital Economics estimations, offshore structures with British Virgin Islands companies allow to avoid up to US$750 million tax. Also offshore tools help businesses to maintain high level of secrecy, as BVI allows for less transparency than for example UK. The jurisdiction is convenient for UK businesses, as being a British Overseas Territory it applies legal system similar to the British one. The companies, many of which are British-owned, make billions of dollars in annual revenue.
The report stated that quarter of BVI companies are funds and investment tools, not the operating businesses, and 5 per cent are holding companies for property and family wealth.
The British Virgin Islands Financial Services Commission has been made aware that the company named Private Placement Associates has offered investments business services through its website www.privateplacement.ae/, while purporting to be licensed and regulated in the jurisdiction. It was confirmed by the Commission that the company under this name has never been incorporated in the British Virgin Islands or licensed by the BVI FSC to carry on financial services business in the BVI.
Also, according to the public statement issued by the Financial Services Commission, Private Placement Associates does not operate under the licence held by any entity licensed and regulated by the FSC.
The Financial Services Commission has issued public statement concerning the company named OKPAY Inc., to inform the public that the company has never been licensed or regulated by the BVI FSC to carry any type of financial services business.
The company OKPAY Inc. was incorporated in the BVI jurisdiction in November 2009, and is believed to operate the website at www.okpay.com to conduct online money services business without having received the requisite licence from the Commission.