British Virgin Islands added to EU blacklist

The European Union (EU) has added the British Virgin Islands to its so-called ‘blacklist’, the EU’s list of non-cooperative jurisdictions for tax purposes.

Costa Rica, the Marshall Islands and Russia were also added.

The Council of the EU said that it regrets that these jurisdictions are non-cooperative on tax matters and has invited them to improve their legal framework in order to resolve the identified issues.

The EU said that this revised EU list of non-cooperative tax jurisdictions includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms. Those reforms should aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.

The British Virgin Islands (BVI) is committed to complying with evolving international standards on transparency and the fight against financial crime.

In a statement the Government of the British Virgin Islands, said that legislative changes (including BVI Business Companies Amendment Act 2022, and BVI Business Amendment Regulations 2022) made in 2022 and which came into force on 1 January 2023, evidence the steps put in place to meet requirements set out by the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes as part of its Peer Review Process.

The statement added: “These key legislative developments were not recognised in the most recent OECD Peer Review rating given to the BVI in November 2022, which moved BVI from ‘largely compliant’ to ‘partially compliant’. As a ‘largely compliant’ rating is one of the criteria that determines the “EU List of Non-cooperative Jurisdictions for Tax Purposes” (EU List), the BVI has been added to Annex I as a formality and matter of process.

“This is noted by the EU Council which states that this is the ‘first time’ the BVI has been included in the EU list (Annex I) and reflects the compliance process of the ‘OECD standard on exchange of information on request (criterion 1.2)’.

“As such, the BVI Government has requested that a supplementary review be granted by the OECD Global Forum that will more accurately reflect the BVI’s current legislative status. Following a supplementary review, the BVI is hopeful that a “largely compliant” rating will be reinstated. This should then ensure the BVI is moved back to Annex II of the EU List,