Mr. Fahie agreed with Mr. Fraser’s analysis, calling the situation a “harsh reality” and explaining that the VI merged the two company “regimes” in 2004 in order to comply with global standards and regulations.

He pointed out that the HOA passed the Micro Business Companies Act 2017 as “an attractive, cost-effective alternative corporate vehicle for startup entrepreneurs and locally traded companies that do not operate or intend to operate complex structures.”

Mr. Fahie added that the Financial Services Commission is working on ways to operate the “MBC regime” so as to provide relief for local companies.

‘Total nonsense’

Mr. Fraser retorted by calling the MBC Act “total nonsense,” to which Mr. Fahie asked Mr. Fraser to “please share that model with us” that won’t “create any hardship or concerns by the [Organisation for Economic Cooperation and Development] and all those other entities that comment on financial services around the world.”

In another question, Mr. Fraser pushed Mr. Fahie on whether the VI is being “shortchanged” by the financial services industry, comparing the territory to other finance centres like Luxembourg and Monaco.

Mr. Fahie explained that one in ten workers in the territory is employed in the international business and finance sector and that average annual earnings across all sectors amount to about one third of the average annual earnings made by employees in those sectors.

He added that financial services revenues make up about 62 percent of government revenue.

The premier went on to say that employees in the financial services industry stimulate the economy by renting homes and spending money at restaurants and other businesses.

He added that it is “futile” to compare the VI to Luxembourg and Monaco, which have different financial services models, and that the territory’s own industry helps support a sustainable economy with minimal debt and was crucial in aiding the islands after the devastation of the 2017 hurricanes.