BusinessBanking & Finance

BVI tax haven picks Hong Kong for drive into Asia

British Virgin Islands gets city's help in opening Asia-Pacific HQ to deal with central banks and regulators from Singapore to Japan

PUBLISHED : Thursday, 16 May, 2013, 12:00am
UPDATED : Thursday, 16 May, 2013, 4:15am

The British Virgin Islands, a Caribbean tax haven, is to open an office in Hong Kong, amid mounting pressure on the city itself to be more transparent as offshore havens open up their financial secrets.

The opening of an Asia-Pacific headquarters in Hong Kong is very important to the islands, a British Overseas Territory, said the islands' Premier and Finance Minister, Orlando Smith.

"This government has long viewed the establishment of a far east BVI representative office as a major component of the strategy to expand and deepen the commercial footprint of the territory in this most important global market," Smith said.

More than 40 per cent of the British Virgin Islands' financial services business comes from Asia-Pacific, Smith pointed out. "There is a very strong financial connection between China, Hong Kong, Singapore and the BVI. This connection will be strengthened with the establishment of a formal physical presence there," he said.

The islands' Hong Kong office will officially open this year and service Asia-Pacific, including the mainland, Singapore, Japan and Taiwan, Smith said. The office will act as a point of contact for central banks, monetary authorities and other regulators in the region, he said.

John Bruce, Macau director at Hill & Associates, a Hong Kong-based risk consultancy, said the British Virgin Islands account for most of Hong Kong's offshore business.

As a financial centre, Hong Kong will gradually move towards greater transparency, Bruce predicted. "It's counterproductive for Hong Kong to be seen as less transparent than other first-world financial centres," he said. "We have one of the biggest stock exchanges in the world. I doubt Hong Kong wants to be seen replacing Singapore as a secret haven."

It's counterproductive for Hong Kong to be seen as less transparent than other first-world financial centres ... I doubt Hong Kong wants to be seen replacing Singapore as a secret haven

On Tuesday, Singapore said it would adopt measures to make it easier to share information on potential tax evaders with other countries, including the United States. Singapore said it would sign up with the Organisation for Economic Co-operation and Development's multilateral treaty on sharing tax details, to which Hong Kong is not a signatory.

In recent weeks, British Overseas Territories including the British Virgin Islands, the Cayman Islands, Anguilla, Bermuda, Montserrat and the Turks and Caicos Islands have agreed to exchange financial information with Britain, France, Germany, Italy and Spain. This week the European Commission was mandated to negotiate with Switzerland, Liechtenstein, Monaco, San Marino and Andorra to tighten measures against tax evasion.

InvestHK, the government agency supporting foreign businesses setting up in Hong Kong, said it was providing assistance to the British Virgin Islands to open an office in the city.


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