The financial services sector in the British Virgin Islands is set to soar as the new economic substance rules are expected to triple the number of persons employed by the industry.
Under the new rules, it is mandatory for offshore financial services companies to set up physical offices in the BVI. According to the director of international business, Neil Smith, while the 400,000 plus registered companies in that sector will be reduced, the number of persons involved in the sector is likely to triple on the ground.
"That's where we will benefit because you will have more people here buying clothes, food, payroll taxes" he told local news outlet BVI News.
It is a tradeoff, so that’s why we are excited"
"It is a tradeoff, so that's why we are excited," he added.
The Economic Substance (Companies and Limited Partnerships) Act was implemented to keep the BVI off the EU's blacklist of non-compliant tax haven jurisdictions.
Smith said all registered offshore companies must satisfy the new economic substance requirements "by the end of 2019".
The BVI government hired a UK attorney at a cost of up to $400,000 to draft a piece of legislation for the territory's financial services industry for it to meet EU requirements.
The Economic Substance (Companies and Limited Partnerships) Act, 2018, was passed the House of Assembly on 19 December, ahead of the deadline set by the EU for the BVI and other financial centers, according to the statement released BVI premier and minister of finance Orlando Smith.