Dear Madam,
I was interested to read your feature on offshore jurisdictions and India (Racing for a place in the sun, IBLJ volume 3, issue 4).
While Mauritius entities have hitherto been widely used for inward investment into India (accounting for approximately 44% of overseas investment into India between April 2000 and April 2009, according to a recent study by Deloitte), this has undoubtedly been driven by the favourable Double Taxation Treaty (DTT) which exists between the two countries.
While there have been challenges to the Indo-Mauritius DTT in the past which have resulted in some tightening of the regulations, the perceived holes in the Indian tax system that the DTT offers investors are expected to result in renewed challenges to the DTT, if indeed it is to survive at all. As a result, investors in India are increasingly looking to other less traditional jurisdictions as an alternative to Mauritius to structure their investments, in order to achieve a degree of certainty as to their future tax treatment.
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Already widely used by expatriate Indians, British Virgin Islands offshore structures and entities present an obvious alternative choice. By far the most popular offshore corporate vehicle for investment in China and elsewhere across Asia, the BVI Business Company, in its various guises, is now increasingly used by Indians based in the Subcontinent. The BVI offers cost-effective, zero tax companies, in a well-regulated but business-friendly environment. It has an excellent professional service base, in a dollar-denominated English common law jurisdiction with its ultimate court of appeal in the Privy Council in London.
The financial and corporate legislation of the BVI is relatively straightforward and flexible, and the BVI government is keen to respond to the needs of the international business community. For example, the BVI government has made substantial recent investments to ensure that the territory could host the newly established Commercial Division of the Eastern Caribbean Supreme Court.
BVI service providers hope and expect to see India becoming an increasingly important market in coming years. We want India’s business, and believe we make a convincing case to attract it.
William Hare
Managing Partner
Forbes Hare
British Virgin Islands
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