British Virgin Islands Relaunches Campaign to Attract Indian Business, Claiming Improved Tax Cooperation

Nearly a decade after the Panama Papers leak, the British Virgin Islands (BVI) is making efforts to attract Indian business, according to a Mint report. The territory stated that it has resolved previous shortcomings in sharing tax information with New Delhi.

The Panama Papers, published in April 2016, involved 11.5 million leaked files from Panama's law firm Mossack Fonseca. These documents exposed offshore structures used by wealthy individuals and companies worldwide, sparking investigations into whether income and wealth were properly declared. More than half of the offshore companies in the leaked files were incorporated in the BVI, while over 500 Indians, including non-resident Indians, were associated with entities linked to the leak.

In an interview with Mint in New Delhi in August, BVI Director of Financial Services Ayana Glasgow acknowledged that past challenges had been faced in exchanging information with Indian authorities. She stated that these challenges were related to the way their governance system operated, which came to light from the Panama Papers. This generated significant media interest regarding whether Indian individuals were paying taxes. Glasgow added that they have been able to work together with Indian authorities to resolve these issues.

Following the leak, the Indian government formed a Multi-Agency Group (MAG) on April 4, 2016, to ensure coordinated and swift investigations. It included officials from the Central Board of Direct Taxes (CBDT), the Enforcement Directorate (ED), the Financial Intelligence Unit, and the Reserve Bank of India.

To prevent tax evasion and money laundering, India and the BVI signed a Tax Information Exchange Agreement in February 2011. Under this agreement, competent authorities of both countries can exchange relevant information for the administration and enforcement of domestic tax laws.

Following the leak, India sent numerous requests for information to the BVI under the agreement. An official notification issued in May 2016 by the Foreign Tax and Tax Research Division of the Department of Revenue stated that the BVI was expected to receive numerous requests as investigations gained momentum in India.

BVI Premier Natalio D. Wheatley stated that the territory had recognized these shortcomings and taken steps to improve cooperation with India. He said they had sent the director of the Hong Kong office and the head of the international tax authority. They were able to establish a wonderful working relationship that India was satisfied with. Wheatley added that they had expedited and prioritized all requests for tax information from India.

Revised bilateral relations have also strengthened the BVI's new commercial outreach in India. Wheatley led the territory's first public-private financial services trade mission to India from August 24 to 31 in search of new business, stronger institutional ties, and a larger presence in the Indian market.