Swiss Private Wealth Escapes To The Bahamas & the BVI.
The Bahamas has enjoyed an “influx” of private wealth management
business due to a change in Swiss banking laws, a senior accountant warning the Bahamas that as a result, it would continue to face external pressures for greater
regulation and transparency.
Michelle Thompson, managing partner
at Ernst & Young (Bahamas), said We’re seeing an influx of some of that wealth to the Bahamas a result of those engagements.” Private wealth
management will change as a
result of FATCA and the exchange of information. “Recently, the US government, from
its conversations with the Swiss government, is able to go directly to the
Swiss banks and demand that that information be disclosed.
Concurrently with this influx of Private Wealth to he Bahamas; the
British Virgin Islands got more foreign direct investment last year than the
major emerging economies of India and Brazil combined, a UN survey said on
Tuesday January 28, 2014. It
welcomed US$92 billion of foreign cash last year, according to preliminary
figures compiled by the Geneva-based UN Conference on Trade and Development
(UNCTAD) think tank.That was
the fourth-biggest haul of investment globally. The world’s biggest economy,
the US, attracted US$159 billion.
countries, foreign direct investment mainly consists of companies spending on
cross-border corporate acquisitions and new overseas projects. However,
for the British Virgin Islands, most of the money is transferred quickly in and
out of the country or cash moved through the treasury accounts of large firms,
which UNCTAD terms “transnational corporations” (TNCs).
The islands’ annual inflow of foreign
investment was up 40% from a year ago and continues a trend that took
off after the economic crisis struck and governments began cracking down on tax
UNCTAD investment and enterprise division director James Zhan saidthe British Virgin Islands’ boom in investment would be unlikely to continue at
the same pace because regulators were determined to stop such flows.
continued flows to the islands, which UNCTAD has previously referred to as a
tax haven, is likely to keep it under the microscope of the G20 leading
economies, which has said it wants to put pressure on “non-cooperative
has asked the Organisation for Economic Co-operation and Development (OECD) to
lead efforts on curbing international tax evasion and avoidance, and the
organization’s tax transparency forum has named the British Virgin Islands as
one of five countries that failed to meet international standards on tax
the five either failed to share taxpayer information with other countries or to
gather information on beneficial ownership of corporate entities registered on
their territory, or both.
The OECD has
said big international companies, banks and agencies may think twice about
investing through these jurisdictions. It is apparent that much of this Private Wealth Exodus, will mostly have a short stay in the Bahamas; since it has agreed to enter into a FATCA Agreement. In our post Bahamas Agrees to Enter into FATCA Agreement With the US!, we discussed that on August 12, 2013, the Minister of Financial Services Ryan Pinder said that the Bahamas Government has agreed that the country will achieve compliance under the United States Foreign Accounts Tax Compliance Act (FATCA) by negotiating and entering into a Model 1 Intergovernmental Agreement (IGA) with the United States Department of the Treasury.
It is also apparent that much of this Private Wealth Exodus, will mostly have a short stay in the BVI as well; since it has agreed to enter into a FATCA Agreement. In our post BVI to comply with US FATCA!we discussed that the leader of the British Virgin Islands says the Caribbean territory has started talks with the US Treasury to comply with a law designed to counter offshore tax evasion.