BVI legal and accounting and tax considerations in 2024

Over the years, the BVI has implemented tougher legal requirements to comply with international trade laws and sanctions and they stayed on the white list of the OECD and the FATF.

• New legislation for BVI legal entities

  BVI introduced the Economic Substance Legislation in January 2019 to avoid getting back on the EU’s blacklist of tax neutral jurisdictions.

  The law requires each legal entity registered in the BVI, which is not tax resident outside the BVI, such as i) companies and ii) limited partnerships as well as iii) foreign companies and iv) partnerships, to comply with economic substance requirements.

  Below are the main measures which will be used to test economic substance:

  • The entity conducts core income-generating activity in the BVI;
  • The entity has an adequate level of employees physically present in the BVI;
  • The entity has significant and adequate expenditure in the BVI;
  • The entity has appropriate physical offices or premises for the core income generating activity;
  • The period of financial reporting is no longer than a year;
  • If the core activity is IP business, the relevant equipment is located in the BVI.

  The act also applies to corporate service providers registering companies in the BVI. These companies i) need to know where the relevant entity is tax resident and ii) are also mandated to convey the information to the BVI revenue authorities, if required.

  Penalties will be imposed for both:

  • Failure to provide required information to the International Tax Authority in the BVI; and
  • Operating a legal entity which does not fulfill the economic substance requirements.

• Deregistration of a BVI legal entity

  The process of deregistering a company is dictated by the Government. This process will take a minimum of 6 months;

• Tax obligations

  • The British Virgin Islands has no corporate tax, value added tax (VAT), capital gains tax, wealth tax, or any other tax applicable to a British Virgin Islands company. These companies are exempted from income taxes and stamp duties regarding all instruments or deeds relating to company business, including the transfer of property etc.;
  • The tax year is the calendar year. However, there are no return filing requirements for corporate nor income tax purposes. However, monthly filings for payroll, social security and national health insurance is mandatory;
  • There is no withholding tax on dividends, interests, royalties, fee for technical services or branch remittance tax;
  • The BVI has no double tax agreements; but has concluded tax information change agreements with at least 28 countries;
  • It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile, and that they fulfil those obligations annually. Let us know if you need Healy Consultants Group’s help to clarify your annual reporting obligations.

• BVI Companies Act Amendments with effect from 2023

  • From 1 January 2023, companies must annually file an annual return. Failing to comply will lead to fines or strike off by the Registrar.
  • From 1 January 2023, names of the directors and alternate directors of BVI companies will become publicly available. Other personal information or former directors’ names will not be accessible to the public.
  • BVI Companies will no longer be able to issue bearer shares and any existing bearer shares will automatically convert into registered shares on 1 July 2023.