The British Virgin Islands TIEA With India Comes Into Force

On 22 August 2011 the Tax Information Exchange Agreement ("TIEA") between the British Virgin Islands ("BVI") and India came into force. TIEAs facilitate the exchange of tax information between two jurisdictions and are utilised to help prevent tax evasion (where no tax treaty already exists), money laundering and harmful tax practices.

The BVI continues to be the number one offshore centre for incorporations with approximately 456,000 active companies and 500 partnerships. With the TIEA now having come into effect, our expectation is that BVI companies or partnerships will be used increasingly by Indian companies in overseas acquisitions. A substantial proportion of investments by Indian companies in overseas markets is currently undertaken through a special purpose vehicle ("SPV") set up in jurisdictions such as the BVI. BVI entities benefit from both a modern f lexible corporate law regime and tax neutrality (the BVI corporate tax rate is zero), which is conducive