The government of the British Virgin Islands is introducing a seven-percent tax on all monies leaving the territory through money transfer agencies.
This will be made possible through a bill entitled the Financing & Money Services (Amendment) Act 2020, which passed in the House of Assembly on Friday, April 17.
“The fee applies only with respect to monies transferred outside the territory and is to be collected by the licensed transmitter to be paid to the Financial Services Commission (FSC),” Premier Andrew Fahie said during Friday’s sitting of the House.
Fahie, who is also the Minister of Finance, further said the monies collected from all transactions will be deposited into a fund earmarked for various national development initiatives.
Sectors to benefit from fund
While listing a number of areas that will benefit from the fund, Fahie said each of those areas will get 20 percent of the overall taxes collected for monies sent.
He said these areas include programmes benefitting seniors.
“This will include infrastructure, assistance programmes and other initiatives subject to Cabinet’s approval,” Fahie said.
He added: “Educational programmes, infrastructure, scholarships – specifically medical, hospitality, fishing and agriculture areas – and other initiatives subject to Cabinet’s approval will [also] get 20 percent of the proceeds.”
Landbank and first-time homeowners, as well as the fisheries and agriculture sectors, are the three other areas that will each benefit from 20 percent of the overall fund.
7% funds not to receive deductions from FSC
The Finance Minister also said the monies collected from the seven percent will not be subject to other deductions after being collected by the FSC.
According to Fahie, this is to maximize the revenue that will be available to support all intended initiatives.
“The monies collected by the commission will not be subject to the statutory sliding scale percentage withholdings deducted by the commission, and any other revenue that the commission collects and pays over to the government under the Financial Services and Commission Act,” he said.
Premier Fahie described the Bill as a very important development in the territory’s financial services. He said it is needed for times when economies across the world are threatened by pandemics such as COVID-19.
The Financing & Money Services (Amendment) Act must now be assented by the governor to become law.