British Virgin Islands

Sunday, Aug 09, 2020

Money transfer tax too high and bad for business! Residents sending less frequently in smaller amounts

Money transfer tax too high and bad for business! Residents sending less frequently in smaller amounts

By Esther Durand, BVI News Staff Since the controversial Financing & Money Services (Amendment) Act became law on May 4, commercial activity in that sector has slowed significantly.

The legislative amendment mandates that a seven percent tax be taken from all monies leaving the BVI through money transfer agencies.

Meslyn Allan, who is the Marketing & Network Development Manager for GraceKennedy Money Services Ltd - the exclusive agent of Western Union in the BVI - told our news centre that persons are still sending “but are doing so less often and in smaller amounts”.

“Feedback from our Western Union customers suggest that they are not opposed to the tax. However, they believed the levy is too high and makes it very difficult for them to continue to transact business in the way that they are accustomed to,” Allan told BVI News in a recent interview.


Business was good before tax

She said data also indicated that business was ‘growing moderately’ before the coronavirus, “however, it has become further challenged by the implementation of the transaction levy”.

“Since it’s implementation, the business has and continues to see a significant reduction in transaction volumes when compared to the prior year,” Allan added.


Residents seeking out alternative means

An operating agent for another local money transfer agency, who spoke on the condition of anonymity, said traffic at her outlet has ‘definitely decreased’.

“People are finding other means, and I guess there is an underground market as well that is being established. They are using apps or banks because they just find the seven percent too expensive. So it is having a negative effect,” she told BVI News.

The money transfer agent said people regularly used the service before the introduction of the levy and “didn’t have a problem”.

“Business was brisk, very brisk. But it has dropped by at least a quarter, I would say if not more,” she stated.

She said her biggest fear is that persons will stop using the service altogether.

BVI News also reached out to other agents in the industry, however, they declined to comment out fear of being victimized.


Premier pleased with tax

Back in mid-June, less than two months after the tax amendment came into effect, Premier and Minister of Finance Andrew Fahie said government was seeing huge returns from the levy.

“The slowest week thus far was the second week in May, around there, and that week was $843,670.03. If you just take seven per cent out of that week, you have $59,056.90. With about 30 more weeks to go for that seven percent, you would calculate it to be $1,771,707.06,” he said while speaking in the House of Assembly on June 16.


Tax to benefit five sectors/programmes

Every dollar collected from the seven percent tax will be distributed among five local sectors and initiatives. Each of those areas will get 20 percent of the overall taxes collected.

These areas include programmes benefitting senior citizens, educational programmes, landbank and first-time homeowners, the fisheries sector, and the agriculture sector.

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