The British Virgin Islands is home to a "globally respected international business and finance centre" facilitating an estimated $1.4trn in cross-border trade and investment, according to a new report launched today (29 March).
‘Beyond globalisation: The British Virgin Islands contribution to global prosperity in an uncertain world', revealed that are currently just over 375,000 active BVI Business Companies, roughly 57% originating in Asia and 16% from Europe and North America.
The quantitative and qualitative research of firms operating in the BVI was done by UK consultancy Pragmatic Advisory, commissioned by BVI Finance to assess the role and value of the British Virgin Islands and its international business and finance centre to the global economy in what are increasingly uncertain times.
Investment mediated by BVI Business Companies supported around 2.3 million jobs globally and generated an extra $14bn each year in taxes for governments worldwide.
In the UK, BVI companies hold an estimated $153bn in assets, with 134,000 jobs created by investment mediated through the BVI and $3.5bn of tax revenues generated for the UK government.
Elise Donovan, CEO, BVI Finance, said: "This report provides clear evidence of the role the BVI plays in facilitating investment, stimulating economic growth, creating jobs and providing governments with much needed tax revenues.
"With this research, we can continue to break down some of the myths and educate more people on the true role the BVI plays as a respected and valued international financial and business centre and a key intermediary in the global economy.
"Whatever form the next evolution of globalisation takes, international financial centres like the BVI will remain vital cogs in boosting the global economy by facilitating investment and enabling a more efficient global marketplace."
Speaking to International Investment, she highlighted the BVI's "world leading" development of a "comprehensive and robust electronic record of beneficial owners".
The Beneficial Ownership Secure Search System (BOSSs) stores the details of beneficial owners of registered companies and certain other entities in a central database, accessible to domestic law enforcement, regulators, and international partners.
She further said that BVI law required registered agent to verify this information and carry out customer due diligence, with enhanced requirements for politically exposed persons.
Privacy and security remain key considerations for high net worth individuals holding assets but "they are no longer the main drivers", the report further said, citing that the BVI has over 1,000 private trust companies on its register.
The ‘Beyond Globalisation' report also challenged detractors who claim that it is ill-regulated and complicit in international financial crime, arguing that BVI has quickly adopted common standards and protocols such as the introduction of economic substance requirements in response to European Union and Organisation for Economic Co-operation and Development obligations to prevent harmful tax practices and profit sharing.
"No nation can claim to be completely free of crime and dishonesty, but the supposed evidence against Road Town's offshore industry fails to substantiate the rhetoric."
It identified three scenarios for the future of globalisation and the opportunities for the BVI.
In the first scenario - ‘Weaker internationalism' - pre-pandemic globalisation trends continue, albeit more slowly and with plenty of political obstacles to navigate.
In ‘the bloc economy,' economic and regulatory integration between countries continues within geopolitical blocs, but these different groups diverge.
Lastly, ‘new economic nationalism' is a partial reversal of globalisation with increased protectionism, less porous borders and more erratic politics.
See the Globalisation scenarios summary below:
Source: Pragmatix Advisory
Mark Pragnell, director, Pragmatix Advisory, added: "Looking into an uncertain future and beyond the globalisation of recent decades, there are many different scenarios for geopolitics and economics, but the need will remain for expert, neutral and innovative centres, like the British Virgin Islands', to support cross-border trade, investment and mobility."
Speaking to International Investment he pointed to one of the key findings in the report as to how the British Virgin Islands had become a globally significant hub for cross-border investment.
"Over the past four decades, the islands' capital, Road Town, has been home to a cluster of specialist offshore services firms, which we call the ‘international business and finance centre'.
"Central to much of this is use of the ‘BVI Business Company', which is a registered company structure established under the territory's long-established and respected legislation providing a flexible and secure legal framework for a wide range of cross-border financial, wealth management and corporate activities."
The full Beyond Globalisation report can be viewed here.
