The British Virgin Islands are located in the northeastern part of the Caribbean Sea. It is a British overseas territory and its legislation is consequently based on the British law. Ninety percent of the BVI population lives in the capital city of Road Town on the island of Tortola. The two pillars of the local economy are financial services and tourism. A large number of offshore companies are registered in the BVI, which also greatly contributes to the overall prosperity of the territory. The official currency there is the US dollar and there is no currency control. The official language is English.
Legislation governing offshore company registration in the BVI
The offshore industry has been developing in the BVI since the 1980s. This is one of the oldest offshore zones in the world. Around 40% of all offshore companies are domiciled in the BVI. The reason for that is not only a favorable geographical position of the islands. The legislation that regulates the activities of the offshore companies registered in the BVI is quite transparent and the recent amendments have put it in conformity with the international efforts to fight money laundering. The British Virgin Islands is a reputable offshore jurisdiction.
The Law ‘On Companies’ from 2004 is the main legislative act regulating the activities of the BVI-registered offshore companies. The amendments to the Law passed in 2019 make the information about the company beneficiary owners open to the public but tax exemptions are still available and the reporting requirements are lax.
Since January 1, 2019, the Law ‘On Economic Substance’ has been in effect. It is aimed at combating the practice of registering shell companies in such spheres as insurance, banking, finance management, leasing, shipment, and so on.
Any company that conducts business activities in such spheres now has to demonstrate that it has a registered legal address in the BVI and an office with a sign. In addition, the company shall have a local director or manager, a telephone number and/ or a website. The company founders shall take active part in company management and visit the BVI regularly for business meetings.
FREE EXPERT CONSULTATION
information from an expert on taxes
and possible tax benefits of the jurisdiction
appropriate to the company's structure.
oinformation from an expert on taxes and possible tax benefits of the jurisdiction appropriate to the company's structure.
The benefits of registering an offshore company in the BVI
The BVI is a reputable jurisdiction and this fact is internationally recognized. The OECD has the BVI on the white list of countries. Besides, the jurisdiction is neither on the EU nor on the FATF black lists. The taxation system there is stable and the corporate laws are applied in a consistent manner.
The main advantages of registering an offshore company in the British Virgin Islands are as follows:
- Tax exemption is legal in the BVI and the jurisdiction applies the territorial taxation system. This means that no taxes are due if the resident company does not make any income in the territory of the BVI. The application of this taxation system is going to continue in the foreseeable future while some other offshore jurisdictions are increasing the tax burden on business companies registered there.
Companies domiciled in the BVI that conduct business activities abroad do not have to pay the income tax. There are other exemptions as well including the capital gains tax, the inheritance tax, the sales tax, and the VAT. No taxes are due on the dividends, interests, rent, royalties, and other sorts of compensation that a BVI-registered company pays to somebody.
- High level of confidentiality protection. The registration agent does have exhaustive information about the company beneficiaries. The agent submits the registration documents to the Registrar whose office thus also has access to this information. However, this register is non-public and access to the information that it holds can be given only on a court decision. The public company register does not have to have the information about the company UBOs.
In addition to the information about the company owners and directors, the registration agent has to submit to the registrar the name of the company, the date of its registration, the status (active or passive company), and its legal address.
We are in direct contact with a registration agent in the BVI and we will be happy to offer our company registration services to you.
- At least one shareholder and at least one director is required when setting up a company in the British Virgin Islands. Both natural persons and corporate entities can act as company shareholders and directors. It is not mandatory that the company have a secretary but usually one is appointed anyway because this simplifies the day-by-day signing of the corporate documents. One person (or one corporation) can perform all the three roles at a time and be the company shareholder, director, and secretary.
- It is very easy to manage a BVI-registered offshore company as the shareholder and board of directors meeting can be held anywhere in the world and only as often as is deemed necessary. Besides, there are no requirements as to the audit nor financial reporting.
At the same time, keeping financial records is mandatory. Records of all the incoming and outgoing payments as well as about company assets and liabilities shall be kept for five years and made accessible to the fiscal authorities. The fine for the failure to keep financial records is US$ 10,000.
What types of activities require economic substance in the BVI?
The following types of activities require economic substance on the islands: making interest-free loans and investing into real estate. The economic substance statutory requirements do not apply to consulting companies and capital and asset management companies.
Can an offshore company in the BVI be registered remotely?
Yes, it can. The registration agent will prepare all the application documents and submit them to the registrar.
What is the purpose of keeping financial records?
Fiscal bodies may request the records for inspection at any time. It is up to the company owner whether to hire or not to hire an accountant or a bookkeeper, but the documents reflecting the nature of the financial operations that the company performs shall be made available to the fiscal authorities anyway.