British Virgin Islands
High level of tax transparency, regulatory and compliance standards
More than 1 million offshore companies, the popularity of the Virgin Islands are not just the serenity, the beaches and the islands. According to a recent survey, British Virgin Islands (BVI) is the world’s largest contributor for offshore entities.
A ‘go to’ pad for incorporation of companies for a long time now, the BVI can attribute this to neutral tax, cost-effectiveness & trade discretion. Popular for the highest degree of privacy, any party interested to know more about an offshore company will have to suffice with just the name of the company’s agent i.e. the local firm responsible for arranging incorporation and collecting the annual fees. Hopes of any other information from the agent are otiose.
The British territory consists of four larger islands - Tortola, Anegada, Virgin Gorda, and Jost Van Dyke and 32 smaller islands and islets, of which more than 20 are uninhabited.
As it is one of the most fast, easy and simple to understand, register and incorporate structure, about 460,000 companies have been registered in the BVI, based on the Q4 2014 statistics released by the BVI Financial Services Commission.
Under the International Business Companies (Amendment) Act 2003, from December 31, 2004, all international business companies (IBCs) located in BVI are required to establish and maintain a Register of Directors, and must appoint their first director within 30 days of the IBC's incorporation.
The Registry of Corporate Affairs (the “Registry”) is responsible for ensuring that entities doing business in and from within the Territory are duly registered. The incorporation of BVI Companies can take place within one business day though the time required to process the corporate books averages 2 to 3 days. The Registry also functions as the patents and trademarks registry, facilitating the registration of British Virgin Islands and UK trade and service marks and patents.
Processing time can vary anywhere between 4 to 5 weeks although the registration may take just about 1 day.
Under the 1984 IBC Act, preceded by the 2004 Business Companies Act, just one corporate form was available, that of the company limited by shares. Under the new regime, several different types of companies can be incorporated, namely -
1. Validation of the Name
2. Certificate of Incorporation issued by the Registrar of Companies of the British Virgin Islands
3. Memorandum & Articles of Association, signed by the subscribers of the Company
4. Appointment of First Director
5. General Powers of Attorney (2)
6. Resolutions of the Director
7. Registers & Share Certificates
8. Statutory filings
No Income Tax in British Virgin Islands. Companies carrying out business outside BVI do not have to pay income tax or corporate tax in BVI. Also, BVI shareholders aren’t applicable to tax in BVI on any distributions or dividends paid to them plus no transfer tax on shares. Group funds held by BVI establishments are either used to finance other group establishments through injections of share capital or to fund acquisitions by members in the group without any issues of tax in BVI.
|No.||Type of Tax||Tax Rate|
|7||Alternative minimum tax||No Foreign tax credit|
|8||Participation exemption||No Holding company regime|
|10||Corporate Income Tax||NIL|
|11||Capital Gains Tax Rate||NIL|
|12||Branch Tax Rate||NIL|
|14||Payroll Tax||Payroll tax is levied on both the employer (2% or 6% of the gross salary) and the employee (8%)|
|15||Real property tax||Land tax is levied at USD 50 per acre. Building tax is levied at 1.5% of the annual rental value|
|16||Social security||The employer must pay 4.5% of the employee’s salary, whereas 4% is paid by the employee (both are subject to a cap)|
The BVI Business Companies Act, 2004 (BVI BC Act) entered into force on 1st January 2005. Under the BVI BC Act, companies incorporated under the British Virgin Islands (BVI) Companies Act are exempt from all taxes provided under the BVI Income Tax Ordinance. The BVI BC Act is essentially an amalgamation of the International Business Companies (IBC) Act and the BVI Companies Act, which contained a regime under which all domestic companies incorporated in the BVI were governed. In addition, on 1st January 2007, all International Business Companies on the companies register in the BVI were automatically reregistered under the BVI BC Act and, consequently, the IBC Act was repealed in full.
All Business Companies (BC's) are statutorily exempt from BVI taxes. However, such companies must pay an annual license fee. In general, a BC may not transact business with persons resident in the BVI or own interests in real property located in the BVI unless it obtains the relevant trade license from the BVI government. In addition, a BC may not carry on business as a bank, trust company, insurance company or reinsurance company without a license from the BVI Financial Services Commission.
A highly regarded legal framework makes BVI populous for incorporation of a company. The legal system is based on the English common law that provides a modern outlook with a proven track record and trusted with prudent current legislation.
British Virgin Islands Financial Services Commission is an autonomous regulatory authority accountable for the regulation, supervision and inspection of all financial services in and from within the BVI.
Every individual wishing to form a company in BVI needs to apply through a standard form to obtain a licence. It is granted for one year, renewed annually at the end of each calendar year, each licence expires on 31st December, including in the first year of business.
The Annual renewal fee to the BVI Government is payable once a year (starting from the second year after the incorporation) and due on the following dates:
Failure to pay the Government Annual fee on or before the due date will result in the accrual of penalties payable to Government in addition to the Government Annual fee, as follows:
(a) If the Government Annual fee is paid before the expiration of two months after the due date, the penalty payable will be 10% of the Government Annual fee due; or
(b) If the Government Annual fee is paid after the expiration of two months after the due date, the penalty payable will be 50% of the Government Annual fee due
All non-residents, including British citizens, require a passport to enter the BVI, except that Canadian and US citizens, they need only a birth certificate, certificate of citizenship or voter registration card.
Visas are given for up to six months stay provided that there is a return or onward ticket and evidence of sufficient funds.
Work permit holders are free to travel in and out of the BVI without any restrictions, as long as their work permits are valid. Foreign nationals who work in the BVI and require a visa as well must ensure that their visas are kept up to date, to avoid problems on re-entering the BVI.Compare Jurisdictions Talk to a consultant