The British Virgin Islands (BVI), which are located about 80 kilometers off the coast of Puerto Rico, is a well-known jurisdiction for offshore company setups and corporate trusts. Following the enactment of the Offshore Act in 1984, BVI has become one of the most well-known offshore destinations.
The BVI’s flexible and modern financial regulations make it an attractive option for BVI company registration and opening an offshore bank account in the BVI.
- Good Reputation
The BVI’s dedication to IBC confidentiality has a double-edged impact: in the past, individuals and businesses have used BVI IBCs for illegal transfers and tax evasion due to the secrecy provided to IBC formations.
Rebuilding their reputation has been a top priority for BVI regulators lately, especially since the Panama Papers leak. Several anti-money laundering laws and amendments have been implemented to accomplish this, with the most recent one being approved on April 1, 2018.
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Limited banking options
The BVI’s banking industry is small, with just three banks covering the entire territory. For IBCs to open bank accounts in the BVI, they would need to either have an actual operating business with employees based in the BVI or have an “offshore bank account” for the BVI IBC in a different jurisdiction that is familiar with and has experience with BVI structures.
To open bank accounts for IBCs, the BVI banks now enforce stringent know-your-customer (KYC) regulations, which frequently call for in-person visits and meetings.
- Incorporation cost and annual renewal
Businesses that establish themselves in the BVI are exempt from tax filing and annual reporting requirements, but they must pay an annual maintenance fee to maintain their company’s good standing.
The annual government fees for incorporating and maintaining an IBC that issues fewer than 50,000 shares were increased from US$350 to US$450 in 2018.
Furthermore, BVI IBCs are incredibly affordable for clients seeking a company to hold their assets or function as a business entity for trading, investment, and holding purposes because they do not require a resident director or company secretary.
- Work permits
The BVI government’s 2010 adoption of the Labour Code establishes the foundation for future laws and rules related to businesses. The Labour Department handles the seven to ten-week process of obtaining a work permit. Companies seeking to hire employees from within or outside of the country should be aware of any upcoming regulatory changes.
- Culture
The BVI has a very relaxed business environment. The majority of business activity on the island is centered around financial services and tourism, so there is a lot of coming and going. Being courteous is highly valued by the people of the British Virgin Islands, and it will help you in business negotiations.
- Distance and Communication
Physical distance and communication can be obstacles for an offshore business operating in the British Virgin Islands. To manage stakeholders who are located elsewhere and carry out daily operations, business owners may have to adjust to different time zones and deal with logistical challenges.
- Low taxation requirements
IBCs that incorporate in the BVI but conduct business outside the nation are exempt from corporate taxes because the BVI operates under a “Territorial Tax System.” Income, capital gains, customs duties, sales, profits, inheritances, dividends, interests, and royalties are among the things that these businesses are exempt from taxation.
The BVI government only levies taxes on IBCs in cases where certain aspects of the business are conducted locally, such as hiring local employees or conducting business locally on one of the many islands in the BVI.
Foreign company registration and licensing fees, which are frequently much higher than incorporation in onshore jurisdictions, account for the majority of foreign-operated IBCs’ profits.
The BVI has Tax Information Exchange Agreements (TIEA) rather than Double Tax Agreements (DTAs) with other jurisdictions since withholding tax is not levied there. When other jurisdictions legally require it, the BVI is obligated by a TIEA to disclose tax-related information.
