China, Hong Kong the biggest source of funds mediated through British Virgin Islands, study says
British Virgin Islands investments created 2.2 million jobs and US$15.7 billion tax globally in 2015, according to Capital Economics
Mainland Chinese and Hong Kong companies accounted for more than 40 per cent of the US$1.5 trillion in assets mediated through the British Virgin Islands, underscoring the offshore investment centre’s growing status as a hub for Chinese overseas investment, according to new research issued on Thursday.
Outward investment in 2015 mediated via British Virgin Island companies (BVI) from China and Hong Kong stood at US$608 billion, almost seven fold more than North America’s US$87 billion, 3.6 times the UK’s US$169 billion, and 86 per cent higher than Europe’s US$327 billion, according to consultancy company Capital Economics.
Elise Donovan, director of BVI House Asia, said demand among Chinese companies for offshore centres to facilitate their cross-border business and investment is on the rise. Appeals by China’s senior leadership for companies to invest globally, as well as the need to help support the mainland’s ambitious infrastructure investment scheme were among the catalysts.
“The Belt and Road scheme started in 2013, while most of the projects are still at nascent stages we anticipate there is going to be a lot of trade and investment across borders, which BVI companies specialise in,” Donovan said.
Donovan said she wanted to “demonstrate that BVI is a net contributor to global economy”, following the negative press coverage after last year’s leak of more than 11.5 million financial and legal records belonging to Panamanian law firm Mossack Fonseca, which became known as the “Panama Papers”.
“We create tax benefits to global governments, rather than being a jurisdiction for profit shifting... BVI is not a tax heaven. It is tax neutral juristiction,” Donovan said.
What’s more, the investment mediated by BVI companies supported around 2.2 million jobs worldwide in 2015, with mainland China and Hong Kong accounting for nearly 40 per cent of them, while Europe accounted for 10 per cent, the Capital Economics report said.
