British Virgin Islands there is no capital gains or
capital transfer tax, no inheritance tax, and no sales
tax or VAT. There are stamp duties on certain transactions,
and property taxes.
September 2002, then Chief Minister and Minister of
Finance, Ralph T O'Neal confirmed that the government
was seriously considering the abolition of both personal
and corporate income tax on the Islands. Although
he explained that no pressure had been brought to
bear on the BVI government to impose a zero rate of
income tax, as it stood, the jurisdiction's
tax regime could have come under fire for 'ring-fencing'
certain tax advantages; one of the criteria laid out
by the OECD for defining 'harmful preferential tax
October 2004 former Chief Minister Orlando Smith informed
the country’s Legislative Council that a two-year
transition period would be put in place to smooth
the changeover to the Business Companies Act, which
has lowered the income tax rate to 0% for both local
and International Business Companies.
The new legislation, which took effect on 1st January
2005, was drafted to ensure the territory is fully
compliant with the European Union (EU) Savings Tax
Directive and EU Code of Conduct on Business Taxation,
as required by the United Kingdom of all its Overseas
Under the transition arrangements announced by Dr
Smith, new incorporations were still possible under
old legislation throughout 2005. From 2006, new incorporations
were made under the new Business Companies Act, although
companies already on the register were permitted to
operate under the old IBC Act or Companies Act for
an additional year. Since 1st January 2007, all companies
are operating under the new legislation.
the new legislation, the existing income tax system
for employees disappeared. However, in its place,
a payroll tax is levied at a rate of 14%, 8% of which
is paid by the employer and the remainder by the employee,
although the first $10,000 of income is tax free.
The contribution for small business, defined as those
employing less than seven people and with a payroll
of less than $150,000 per year, is 10%.
British Virgin Islands Income Tax
tax (now abolished) was levied on the chargeable income
of resident BVI Companies Act Companies. As applied
to a company, 'resident' meant that the management
and control of its business was exercised from the
BVI. Normally, if more than half of the directors
are resident in the BVI, then so is the company. There
were three possible cases:
company was resident, in which case it paid income
tax of 15% on its world-wide chargeable income;
company was non-resident, in which case it paid
15% income tax on its chargeable income arising
in or remitted to the BVI; or
company was resident but was an 'offshore trading
company', meaning that 90% of its profits arise
from activity conducted outside the BVI, and it
paid tax at the rate of 1% on its world-wide income.
income was assessed after deduction of expenses; tax
credits were allowed on foreign tax paid in treaty
countries and certain other countries.
British Virgin Islands Taxation
is exempt from tax if:
trust is created by or on behalf of a non-resident
no land in the BVI; and
not carry on business in the BVI.
British Virgin Islands Withholding
are no withholding taxes in the BVI. However, the
BVI, like other British 'dependent territories', was
forced to apply the EU's Savings Tax Directive from
1st July, 2005, and chose to apply a withholding tax
(initially of 15%, rising to 20% post July 1, 2008
and to 35% in 2011) to the returns on savings paid
to nationals of EU Member States. The Directive does
not apply to corporate entities.