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British Virgin Islands: the Best Tax Haven in the World

The British Virgin Islands (BVI) is a Caribbean jurisdiction that is perfect for registering an offshore company from the fiscal point of view. Let us discuss the properties of the BVI as a tax haven and point out why you should seriously consider registering a company there.

British Virgin Islands

Properties of the BVI as a tax haven

The BVI offers legal opportunities to economize on taxes. There are not many such jurisdictions remaining and the BVI has the following properties that make it attractive for international entrepreneurs:

  1. Easy access to the jurisdiction from North American and Europe. Telephone and Internet connection is superb and the mailing services are well-developed.
  2. The official language in the BVI is English.
  3. The BVI has always offered a high level of privacy of personal information. Admittedly, the level is now a bit lower as bearer shares are not permitted any longer.
  4. Many taxes are absent in the BVI: no income tax, nor capital gains tax, nor inheritance tax is charged in the jurisdiction.
  5. Many companies do not have to file tax returns because they do not pay taxes in the BVI. At the same time, financial reports have to be submitted to the registered agent.
  6. The company directors Register is closed to the public and nominee services are allowed in the BVI.
  7. There are no requirements as to the residency of company managers.
  8. Only some types of business activities require having economic substance in the BVI. These include banking, insurance, ship management, intellectual property, and holding companies.

You have to realize that BVI-registered companies are taxed outside the jurisdiction. They may be taxed in the country where they make profits or in the country of the company owner’s fiscal residence. 

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Please consult seasoned experts on tax issues before opening a company in the BVI or some other offshore jurisdiction.

Tax policies in the BVI

The following taxes are NOT payable in the BVI by non-resident companies:

  • Income tax;
  • Capital gains tax;
  • VAT;
  • Inheritance tax;
  • Tax on assets in trust;
  • Tax on dividends, interests, and royalties.

However, companies registered in the BVI are not completely tax-exempt. The matter is that this would be unsafe. The BVI has been deleted from the black list of uncooperative jurisdictions and it does not want to find itself on the list again.

Payments that private foreign companies have to make in the BVI in 2024:

  • The payroll tax is due if local residents are hired. Its rate depends on the annual turnover of the company and the amount of the wage. The payroll tax rate is 10% for small business companies and 14% for larger companies that have 7 or more people on the staff and a turnover that exceeds 300,000 US dollars. The employer is entitled to deduct up to 8% from the employee’s salary and the first US$ 10,000 is tax-exempt.
  • The social security tax is paid by the employee and the employer at the rate of 4.5%.
  • The amount of the stamp duty depends on the number of company shares and the date of its registration. An annual company registration fee is also due to the Government of the BVI. Companies with registered capital of up to US$ 50,000 pay US$ 350 per year and companies with registered capital that exceeds this amount pay US$ 1,100 per year. 
  • No property tax is payable in the BVI but when a non-resident of the jurisdiction purchases a piece of real property, a stamp duty of 12% is due. For residents of the BVI the rate is 4%.
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Please follow the link to find out about the countries where offshore companies do not pay taxes on their global incomes because the countries apply the territorial taxation system. Our experts will be happy to help you register an offshore company in a safe manner.

Recent amendments to the legislation of the BVI

On January 1, 2023, some amendments to the BVI Companies Act went into force:

  • Beginning January 1, 2024, companies registered in the BVI have to submit financial reports to their registered agents (there are exceptions though).
  • General Meeting and Board of Directors’ Meetings can now be held online and the participants can be at any place in the world.
  • The BVI now requires that certain types of companies including limited partnerships and LLCs should have economic substance in the jurisdiction. The requirement has been introduced in order to comply with the international regulations concerning tax evasion practices. The requirement does not apply to those offshore companies registered in the BVI that can demonstrate having economic substance in another jurisdiction.

The British Virgin Islands remain a tax haven even though the requirements have been toughened. The taxes are low in the jurisdiction and its laws efficiently protect the privacy of personal financial information.

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