Regulatory Burdens Crushing Local Businesses--Fraser

Local businesses are collapsing under the weight of costly regulatory requirements while the BVI races to protect its international financial services industry, Deputy Premier Julian Fraser warned in the House of Assembly on Tuesday, October 20.

Speaking during debate on the Limited Partnership (Amendment) Bill 2026, Fraser said businesses owned by Virgin Islanders were being driven under by compliance costs rather than a lack of profitability. He accused those responsible of failing to provide meaningful protection despite years of appeals.

“They want legislation, we give them the legislation that they need to be in good standing internationally. OECD (Organisation for Economic Co-operation and Development), all the rest of it. But at the same time, we are failing our own people,” he declared.

Fraser drew a distinction between companies conducting international business and small, locally owned enterprises operating within the territory. His concern, he stressed, was for Virgin Islanders whose businesses were being burdened by requirements intended to address international regulatory concerns.

He singled out rising registered agent costs and economic substance requirements.

“Why is it that a company owned by Virgin Islanders, formed by Virgin Islanders, in the Virgin Islands, with employees, office space, and everything that is needed for that company to function is here in Virgin Islands, and still I have to file to prove economic substance?” he asked.

Fraser rejected international obligations as a sufficient explanation for the burden, arguing that more effort should be made to secure practical relief for domestic businesses.

He recalled being told that qualifying local companies could obtain a certificate through the International Tax Authority rather than continue filing, but questioned whether that relief was working in practice.

Simply identifying a business’s location in Tortola and supplying an employee’s tax identification number, he said, did not appear sufficient to spare local operators from a process he compared to that faced by international companies whose directors and shareholders had never visited the BVI.

Smith Pledges Help

Junior Minister for Financial Services, Economic Development and Digital Transformation Lorna Smith responded that domestic businesses were exempt from the provisions under discussion and offered the ministry’s assistance to affected operators.

“We’ve had this discussion before and I would like to again reiterate that domestic businesses are exempt from the provisions,” Smith said.

She accepted Fraser’s concern in principle but said she knew of companies that had successfully obtained the exemption. The process, she explained, was handled through the International Tax Authority.

Acknowledging that domestic businesses did not always receive the response they needed, Smith undertook to help them work with the authority to secure the exemption.

“We are here, yes, to support international business, we are equally here to support local business,” she said.

Fraser’s warning also focused on the consequences for owners who could no longer afford to maintain their incorporated companies.

He said he had spent years encouraging local business people to incorporate as a prudent way to protect their personal assets from liabilities arising from their business activities. Those same owners, he argued, were now struggling to keep their companies on the register because of onerous costs and regulations.

“What is happening, businesses are collapsing. They’re going out of business. Their assets are being held by somebody else,” Fraser said, adding that he was uncertain who held the assets in the cases he was describing.

Restoring companies to the register, he complained, cost “an arm and a leg”.

Fraser recalled raising the protection of local businesses alongside At-Large Representative Ronnie Skelton when the limited partnership framework was previously presented as an answer to their concerns.

“It has fallen so far short of the mark that I am here in 2026, making the same cry,” he said. “Something has to be done, and I mean something substantial and real to protect local businesses from going under.”

Explaining the Bill, Premier and Minister of Finance Dr. Natalio Wheatley said it would improve the limited partnership framework through changes to annual returns, exemptions where liquidation has begun, and procedures allowing external creditors to restore partnerships for liquidation.

The amendments also address partnership names, certified translations, accounting records and beneficial ownership reporting, while related regulations revise restoration fees and compliance penalties. He said the measures would improve the regime’s operation and strengthen regulatory oversight.

Smith supported the amendments, linking their importance to the BVI’s efforts to obtain a reassessment of its position with the Organisation for Economic Co-operation and Development.

Fraser also acknowledged the work being done internationally by the Premier and Smith, but insisted that the urgency shown in protecting financial services must extend to local business owners.

“Internationally, we are holding our own because of you. But locally, we’re not,” he said.

He pointed to the House’s willingness to advance four bills through three readings in one sitting as evidence of its commitment to the industry, while demanding the same determination to address the burdens facing Virgin Islanders.

“We have to find a way. It can’t continue. It needs to stop.”