The British Virgin Islands is one of the world’s largest offshore financial center and a leading center for offshore company incorporation.
The British Virgin Islands has a strong offshore regulatory environment. They have a distinct combination of oversight and a laissez-faire approach which makes it both easy to do business – yet reputable with banks and other jurisdictions around the world. The British Virgin Islands has reputable compliance and regulatory body, which makes it very simple and easy to bank with a BVI company.
Business companies in BVI are commonly used as asset protection vehicles, very often in combination with a trust as a holding. The directors of the BVI BC may protect the assets by transferring its assets to another company, trust, foundation, association or partnership; the directors can also merge or consolidate with any other company or can re-domicile the BC to another jurisdiction entirely. The BVI Business Companies Act, 2004 states that all international business companies formed in BVI must establish and maintain a Register of Directors, whereby the initial director is appointed within 30 days of incorporation. Further statutory requirements are minimal and flexible. There are no requirements to appoint a local director or a secretary, no minimum capitalization required, BVI BCs can re-quire and re-issue their own shares.
Incorporation requirements of a Business Company, or commonly known as an International Business Company (IBC) are as followed:
It is not legally required for the directors or shareholders to be of any specific nationality. Making IBCs very straightforward and easy to incorporate in the BVI. Offshore companies are popular in the BVI as it features no minimum capital requirements, exemption from income tax, no need for annual reporting or auditing as well as no capital gains or withholding taxes. However, offshore companies cannot conduct business in the BVI at all. There is no residency requirement for the shareholders/ directors and company secretary.
It is important to note that the procedure for company registration in BVI is quite straightforward but the company legislation is constantly amended, it should be monitored and taken into account at all times. The last amended rules have been made stricter in the identification of investors coming to the jurisdiction. Now, to complete the registration of a company in the British Virgin Islands, the beneficial owners must provide bank statements (resident bank) dating at least six months. In addition, confirmation of the registered address of the founders and their personal data is required.
Furthermore, The BVI’s Economic Substance (Companies and Limited Partnerships) Act, 2018 (BVI Substance Act) came into force on 1st January 2019. The BVI Substance Act is supplemented by the BVI’s Economic Substance Code (BVI Substance Code). This law applies to the following legal entities, they include:
The following legal entities are exempted from the act, they include:
An entity is a “non-resident company” or “non-resident partnership” if the company/partnership is resident for tax purposes in a jurisdiction outside the BVI which is not on Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes.
Each legal entity which is not a tax resident outside the BVI (other than a pure equity holding entity) must, in relation to any relevant activity, carry out defined core income-generating activities in the BVI and demonstrate economic substance by reference to the following criteria with with regards to the nature and scale of the relevant activity:
