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In-Depth Information about the British Virgin Islands

Locationbvi ibc

The British Virgin Islands are located in the Eastern Caribbean. The territory lies to the east of Puerto Rico and is in close proximity and just to the northeast of the U. S. Virgin Islands. There are approximately 60 islands and islets in the BVI of which 16 are inhabited. The total land area is 151 square miles and the largest island is Tortola, which is where the capital and commercial center is located. The islands that make up this British Territory are either flat coral islands or steep and hilly volcanic islands. Constant trade winds make the BVI climate both subtropical and pleasant.

Political Structure

The BVI is an internal self-governing overseas territory of the United Kingdom. The Chief of State is the Queen of England who is represented by the British Virgin Islands Governor. The BVI Prime Minister is the head of government. The Prime Minister’s cabinet, the Executive Council, is appointed by the governor from members of the Legislative Branch’s House of Assembly. The leader of the majority party (or of a majority coalition) in the House of Assembly is normally appointed by the governor to the post of Prime Minister.

The House of Assembly is a unicameral body consisting of 13 elected seats together with one non-voting member, the attorney general. Members are elected by popular vote and serve 4-year terms. The highest court is the Eastern Caribbean Supreme Court. Three of the high judges reside in the BVI.

Economy and Infrastructure

The British Virgin Islands features one of the most prosperous economies in the Caribbean with a per capita GDP that ranks within the top 20 in the world. Approximately 60% of the BVI economy is based on financial services, primarily British Virgin Islands offshore financial services, with the bulk of the remainder based on tourism. The BVI has become a cruise ship destination in recent years.

There were nearly 448,000 active BVI companies in 2012. Incorporation fees account for nearly half the BVI annual revenues. The territory is among the largest domiciles in the world for formation of offshore investment funds, at one point in recent years being second only to the Cayman Islands. With respect to being a source of foreign direct investment, only Hong Kong is a larger source.

Current estimates indicate that upwards of US$125 billion is invested in the BVI each year.

Population, Language and Culture

What is now the British Virgin Islands was first sighted by Christopher Columbus is 1493. The Dutch were the first to establish a European presence on the islands. The islands came under British rule in 1666. English is the official language, the language of business and commerce, and is also the most widely spoken language in the islands. The BVI population was estimated to be 32,000 in 2013. Approximately a third of the population lives in Road Town, the capital, and 41% of the population lives in an urban setting. 82% majority of the population are Afro-Caribbean, 6.8% are white, and the remainder are Indian or mixed.

The national holiday in the BVI is Territory Day, which is celebrated on July 1. Among the various events and festivals of importance the most important is the Emancipation Festival, an annual event celebrating the end of slavery in 1843. The love of water sports that is characteristic of the islands’ inhabitants makes itself known during the Spring Regatta. There is also an annual Music Festival, an Easter Festival, and a Christmas on Main Street event held each year in the capital. The close ties between the BVI and the U.S. Virgin Islands are celebrated once a year on BVI/USVI Friendship Day.

The citizens of the Territory are called British Virgin Islanders. All BVI citizens are also British citizens and can travel on a UK passport and work in the UK and in the EU. Approximately 85% of the population is Protestant. Another 10% is Roman Catholic. The literacy rate of the population over 15 years of age in the BVI is 98.2%.

Exchange Control

The British Virgin Islands has no exchange controls. The US dollar is both legal tender and the currency that is in use. There are no restrictions on the movement of dollar funds into or out of the BVI. Holders of US dollars may freely convert them to other currencies.

The BVI Financial Services Commission is the single financial services regulator in the territory and in conjunction with the British Virgin Islands corporate registry is responsible for authorizing and registering companies or individuals to conduct business in the territory.

Type of Law

The British Virgin Islands law is based heavily on English common law. The Territory’s laws that apply to British Virgin Islands companies, including offshore companies, are quite modern and up-to-date to the point where regulations are presently in place addressing e-commerce. British Virgin Islands company law is regarded by international investors as being extremely sophisticated and is therefore subject to being copied by other offshore jurisdictions. Much of British Virgin Islands company law addresses financial services, key statues being the Securities and Investment Business Act 2010, the Companies Management Act 1990, and the Financing and Money Services Act 2009. BVI law provides a stable framework for BVI offshore company formation and for investors in general.

Principle Corporate Legislation

It is worth pointing out that the BVI government takes some pains to avoid the use of the term “British Virgin Islands tax haven” lest investors look upon the jurisdiction as a place where tax evasion is practiced, which is illegal, rather than a place where tax avoidance is practiced, which is legal. The BVI has a fair and open tax system.

The principal statute for BVI company law is the BVI Business Companies Act 2004. This statute supersedes the International Business Companies Act, which was based on Delaware Company law. This newer statute is based on the New Zealand statute and applies to both local and offshore businesses. Passage of the Act was designed to make BVI more attractive as an offshore financial center.

The BVI Business Companies Act 2004 among other things modernized the regime for registration of security interests, increased the types of companies that can be formed, removed restrictions in relation to the declaration of dividends and removed the requirement that companies had to have a stated corporate object.

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Benefits of BVI Offshore Company Formationsbvi ibc

– A BVI offshore company pays zero income tax. There is no British Virgin Islands tax on capital gains tax, nor are there gift taxes, inheritance taxes, sales taxes, or value added taxes.

– Leading international legal and accounting businesses have a strong presence in the BVI, which enjoys a strong international reputation in the Funds and Investments, Corporate Business, Ship and Aircraft Registration, Captive Insurance and Trust and Estate Planning.

– The BVI has signed over 17 Tax Information Exchange Agreements (TIEAs) including agreements with Britain, France, Germany, Italy, and Spain.

– The BVI features a sub-tropical climate, tranquil waters, and is a destination for those who love yachting and water sports or enjoy ocean cruises.

– The BVI enjoys strong ties with the U. S. Virgin Islands as well as with Puerto Rico. The U.S. dollar is the currency used within the BVI. Being a member of the British Commonwealth, the BVI has strong ties both with the UK and the EU as well.

– Although the both the BVI population and the size of the GDP is smaller than is the case with most nations, its per capita GDP exceeds $38,000 (2008 estimate).

– The government of the British Virgin Islands is noted for its stability. The law in the territory is based on British common law.

– The BVI offers a significant amount of flexibility in the way which corporate mergers and acquisitions can take place. BVI companies and foreign companies are allowed to merge and existing companies are allowed to transfer to or from the BVI.

– International banks having a presence in the British Virgin Islands include the London International Bank and Trust Company Ltd., The Bank of East Asia (BV) Ltd., Scotia Bank, and the First Caribbean National Bank

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Why Choose BVI as an Offshore Tax Haven

The British Virgin Islands has proven to be one of the most attractive jurisdictions in the world for establishing an offshore business. This British territory has up-to-date company laws and regulations that have been specifically designed to attract offshore investors. The British Virgin Islands (BVI) has an open economy that is driven largely by the financial sector, as well as tax laws coupled with a strong regulatory framework that highly favors doing business in the territory.

The British Virgin Island economy is the most prosperous in the Caribbean area. The per capita GDP is high, the literacy rate of the adult population approaches 100%, and there is a strong legal and accounting presence in the islands to provide assistance to those wishing to establish an offshore business there. The BVI is a member of the International Organization of Securities Commissions (IOSCO), the Caribbean Financial Action Task Force (CTATF) and the Organization for Economic Cooperation and Development (OECD), and has been “white listed” by all three organizations.

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Overview of a British Virgin Islands Business Company (BVI IBC)bvi ibc

The British Virgin Islands (BVI) primary offshore company formation product is the offshore Business Company (BC), also known colloquially as an IBC. Since the adoption of the BVI’s offshore statute in 1984 they have incorporated more than 600,000 Business Companies (BC) and remain one of the most popular destinations for offshore company formation services. The British Virgin Islands BC’s are fiercely competitive offshore formation vehicles due to the jurisdictions flexibility and modern financial regulations making the islands one of the most attractive options for registering an offshore company.

The reformulation of the BVI’s international offshore financial model led to the adoption of the International Business Companies Act in 2004 fusing together ‘offshore’ and ‘onshore’ financial activities, opening up local business opportunities to offshore International Business Companies (IBCs)—subsequently referred to as Business Companies (BCs)—reflecting the progressive nature of the jurisdiction and the continuing refinement of the offshore financial model.

 The BVI’s are largely driven by the booming offshore financial sector thanks to its supportive government, strong regulatory system, modern and sophisticated offshore legal framework, and flexible business arrangements all of which has helped make the islands one of the more attractive jurisdictions to form an offshore company.

BVI IBC Features

General
Legal System Common Law
Type of Company for International Business BC
Shelf Companies Available Yes
Non-English Company Name allowed Yes
Time to Incorporate 2-5 Days
Change in Domicile Permitted Yes
Taxation on Profits No
Exchange Controls No
Corporate Requirements
Minimum Shareholders 1
Minimum Directors 1
Standard Authorised Capital US$50,000
Bearer Shares Permitted Yes
Location of Meetings Anywhere
Corporate Directors Permitted Yes
Administration Anywhere
Local Requirements
Registered Office/Agent Yes
Company Secretary No
Director No
Meetings No
Public Filings
Directors No
Shareholders No
Beneficial Owners No
Accounts No
Annual Requirements
Minimum Government Fee US$350
Annual Return No
Accounts No
Audited Accounts No

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Advantages & Top Uses of a BVI IBC

Advantages

– No taxes on income, capital gains, nor are there gift taxes, inheritance taxes, sales taxes, or value added taxes

– Leading international legal and accounting businesses have a strong presence in the BVI, which enjoys a strong international reputation in Funds and Investments, Corporate Business, Ship and Aircraft Registration, Captive Insurance and Trust and Estate Planning

– Regulations and legislation are modern and continually ensuring protection of financial markets

– BVI company law is regarded by international investors as being extremely sophisticated and has been copied by other offshore jurisdictions

– The BVIs have never been blacklisted by FATF or the OECD

– Information and details on Directors, Officers, and Shareholders are not filed with the BVI Register of Companies

– The only documents that are made publicly available are the company’s Memorandum and the Articles of Association but they do not contain details related to shareholders or directors

– The new BVI BC Act enables BCs to conduct business and own real estate in the BVIs

– Minimal compliance requirements

– No reporting requirements

– The sole Director can also be the sole shareholder

– Confidentiality is one of the key features of the BVI BC

Top Uses

– Offshore savings and investments

– Conducting business activities in BVI

– Trade and distribution

– Forex and stock trading

– E-commerce

– Professional service company

– International trading

– Hold bank accounts

– Protection of Assets

Requirements for British Virgin Islands Incorporation

An individual or company who wishes to form a registered company in the BVI must go so through a registered and licenced agent.

There are minimal requirements to formally initiate the BVI company formation process:

1. A notarized photocopy of a passport

2. Notarized addresses details

3. Proposed name of company

4. Amount of share capital (if different than the standard share capital of US $50,000)

The next step is file the company’s memorandum and articles of association with the BVI Registrar, together with a document detailing that a registered agent is agreeing to consent to act in his/her capacity. The registered agent performs a due diligence and having satisfied all the requirements put forth by the Register, it will produce a certificate of incorporation.

NOTE: The registered agent is given the powers to incorporate the offshore company and sign the formation documents on behalf of the client without the need to travel personally to the jurisdiction.

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Taxation of a British Virgin Islands Corporation

A BVI BC pays no corporate tax, including no taxes on capital gains, inheritance, sales, or any value added taxes. All dividends, compensations, rents and royalties are also exempted from BVI taxes.

Corporate Details of a BVI IBC

Anonymity, Confidentiality and Disclosure

Directors and Shareholder information are kept confidential and are not disclosed to the public. A Register of Directors and Shareholders do not need to be held by the Registers office in the BVI. Anonymity can be guaranteed through the use of nominee services—though director and shareholder details already remain confidential.

Company Shares

Share of no par value, preference shares, redeemable shares, registered shares, bearer shares and shares with or without voting rights are allowed.

The memorandum of association must set out the maximum number of shares that the company is issuing or state that the company is authorised to issue an unlimited number of shares.

Required Share Capital

No required minimums or maximums for share capital. Normal authorised share capital is US $50,000, which is the maximum capital for the minimum duty and licence fee payable (US $350), for a share capital of is US $50,001, the licence fee is US $1100. Share capital also need not be disclosed.

Financial Statement Required

There are no requirements to file or submit a statement of accounts nor are there requirements to file an annual return, however a company is required to keep detailed accounting of all transaction which may be kept at the registered agents office, or the Directors have the discretion of maintaining records anywhere in the world of their choosing, though a written record of the physical address of the records must be kept with the registered office.

Directors

Only one Director is necessary, though a President, Secretary and Treasurer are mandatory for a BVI BC; however, a single person or entity may hold all positions. A Director need to not be a resident and may hold any nationality. Any legal entity including corporations or an individual may hold the position as Director. A nominee Directors service may also be used.

Company Secretary

Not required; although a secretary is normally appointed so as to facilitate signing obligations.

Company Meetings

Business Company Director or Shareholder meetings are not necessary

Principal Corporate Legislation

BVI Business Companies (BC) Act 2004 replaced the older BVI Companies Act of 1984; this newly formed statute is based on the New Zealand statute, replacing the legislation that was formerly modelled after the Delaware statues.

The new 2004 legislation, BVI BC, Act legally made ‘offshore’ and ‘onshore’ entities the same in a number of areas and enabled BC’s from conducting business within the BVI. Similarly, International Business Company (IBC) are now called Business Company (BC) which harmonizes the differences between international and local companies.

The Act also regulates the operation of various types of both local and international companies, including those limited by shares or by guarantee, unlimited liability companies, restricted purposes companies and also segregated portfolio companies.

Type of Law

English Common Law with local statutes

Shareholders

One. Shareholder may also be the Director.

Trading Restrictions

BVI BC’s are subjected to restrictions in conducting business in mutual fund management, banking, insurance and trust management. There are no restrictions on doing business or buying any real estate in BVI.

Exchange Controls

The BVI have no exchange controls with no restrictions on the movement of funds into or out of the BVI, which may be freely converted into any currency.

Language of legislation and Corporate Documents

English

Registered Office required

Yes; an imprint of the company seal must be held at the registered office as well as a Register containing the names and details of Directors and Shareholders.

Local Presence

No

Annual Reporting

None required

Shelf Companies available

Yes

Time required to form offshore company

2-5 Business days

Language of Name

English, however a company may use a second foreign character name, but must supply a notarized English translation.

Names Restrictions

Any name that is identical or similar to a name already in use or one that suggests patronage to the BVI government or the British royal family.

Names of Company requiring a special licence or permission

A BC must obtain a special licence if the name of the BC contains any word that includes bank, building society, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, university, municipal or their foreign language equivalents

Permitted limited liability suffixes

“Limited”, “Corporation”, “Incorporated”, “Societe Anonyme”, “Sociedad Anónima”, or their respective abbreviation “Ltd.”, “Inc.” or “S.A.”

Access to Double Tax Avoidance Treaties

There are two agreements in place for Switzerland and Japan, though these agreements allow only for the limited exchange of tax related information and are not applicable to offshore businesses.

Licence Fee

BCs with an authorised share capital of up to US $50,000 are required to pay the sum of US $350 annually, whereas an BC with an authorised share capital greater than US $50,001 is required to pay the sum of US $1,000 per year.

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