The BVI Business Companies Act has effectively removed
the distinction between offshore and onshore companies,
but the new legislation is expected to be just as
popular to 'offshore' investors and clients. Prior
to the BVI BC Act,
the main forms useful for offshore operations
in the British Virgin Islands were the International
Business Company, the various types of non-resident
Cap. 285 company, the International Limited Partnership,
and the Trust.
British Virgin Islands Forms of Offshore Operation
Under the 2004 Business Companies
Act, several different types of companies can be
limited by shares. Likely to remain the most popular
form of BVI company.
limited by guarantee not authorised to issue shares.
limited by guarantee authorised to issue shares.
companies authorised to issue shares.
companies not authorised to issue shares.
Forms of Company for
a fuller description of the 2004 BVI BC Act.
the old IBC Act, offshore operations took place within
the following forms:
Virgin Islands Tax Treatment of Offshore Operations
Corporate Taxes for the general principles of
BVI corporate taxation. NB As from 2006, corporate
income tax in the BVI has been abolished (see below).
2006, offshore BVI companies were taxed as follows
(stamp duty exemptions remain in force):
- Non-resident limited
liability companies (whether limited by shares,
by guarantee or both, ie hybrid) were exempt from
income tax on foreign-derived income, but paid BVI
income tax at 15% on any chargeable income derived
locally or remitted to the BVI.
- Resident limited
liability companies which obtained not less than
90% of their net profit from trading outside the
BVI (known as offshore trading companies) paid 1%
income tax on their chargeable profits.
- International Business
Companies were exempt from income tax and from stamp
- International Limited
Partnerships were exempt from income tax and from
- Trusts without BVI
beneficiaries, local land holdings or business activities
were exempt from income tax and stamp duty.
all captive insurance companies, mutual funds and
foreign investors use the Business Company, Limited
Partnership or Trust formats; thus, they were exempt
from local taxation. License fees are payable as
follows in addition to registration and incorporation
fees (for which see Forms of Company):
- Insurance Companies:
Application fee $500; Annual license fee $1,000
(Credit Life Companies), $2,000 (LongTerm/General
- Mutual Funds: Application
fee $350 (Private and Professional Funds), $500
(Public Funds); annual license fees are the same.
October 2004 Chief Minister at the time, 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 proposed new
Business Companies Act, which
lowered the income tax rate to 0% for both local
and International Business Companies.
The new legislation, which took effect on 1st January
2005, has been 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 Territories.
Under the transition arrangements announced by Dr
Smith, new incorporations were still possible under
old legislation throughout 2005. From 2006, new
incorporations must be 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.
From 1st January 2007, all companies
required to be operating under the new legislation.
The Act requires companies to use a registered agent
to ensure compliance with the new laws.
the new legislation, the income tax system for employees
has also disappeared. However, in its place, a new
payroll tax was is levied, 8% of which is paid by
the employee. The first $10,000 of income remains
Local firms are now required to pay annual licence
British Virgin Islands Taxation
of Foreign Employees of Offshore Operations
are no special rules applying to the foreign or BVI
employees of operations. The general principles of
individual taxation in the BVI also apply to the resident
employees of non-resident entities. There are no special
privileges or exemptions for expatriate workers, indeed
they pay higher land taxes than BVI residents.
British Virgin Islands Exchange
Virgin Islands have no exchange controls.
Virgin Islands Offshore Activities
BC Act 2004 has removed the distinction between offshore
and onshore companies.
former legislation, International Business Companies
(and International Limited Partnerships) were permitted
certain local activities:
- Make and maintain
deposits with banks;
- Professional contacts
with solicitors, barristers, accountants, book-keepers,
trust companies, administration companies, investment
advisers etc (not to be cynical, anyone who charges
- Prepare or maintain
books or records;
- Hold meetings of
directors or members;
- Hold a lease of property
to use as an office for other permitted purposes;
- Hold shares, or other
securities, in another IBC;
- Hold shares, or other
securities, in a company owned by a BVI resident
or a BVI-incorporated company.
Companies Act (Cap. 285) Companies were permitted
to do business locally but paid income tax on the
Virgin Islands Employment and Residence
to work in the BVI, a work permit is needed, except
for 'Belongers', naturalised citizens and holders
of a certificate of residency. Work permits are issued
only when there is no suitable local applicant for
a new labour code introduced in 2002, it was proposed
that 'non-belonger' workers in the Islands would no
longer be granted an initial work permit of more than
five years. Permits would be issued for up to one
year at a time and then be considered for a renewal
or an extension. A new five-year limit was introduced
under which workers who have held work permits for
five years must leave the BVI with their dependents
and remain outside the territory until they can be
considered for either re-employment or new employment.
The proposals were resisted by business interests.
Code 2010, gazetted in May 2010, came into force on
4 October 2010. The Code revises the rules for work
the Code, work permits are valid for a maximum of
three years and may be renewed upon application. Applicants
who do not receive a renewal may be entitled to severance
pay from the employer.
In order to lease or
purchase land, non-Belongers must obtain an Alien
Landholding Licence. Applications for a Licence must
be accompanied by two personal financial references,
one bank reference, two character references, police
record, application fee of USD200
(per individual) or USD300 (per company). Once the
licence has been granted applicants pay an acceptance
fee of USD600 per person and USD1000 per company.
Licences carry a 2 or 3 year commitment to develop
December, 2004, the government outlined the details
of a new immigration policy framework in a bid to
clarify the rules surrounding applications for residence
and ‘belonger’ status. Then Chief Minister Orlando
Smith explained that the Board of Immigration would
make recommendations in 2005 concerning those who
applied for residence status before January 1, 2003
and had lived in the territory continuously for the
last twenty years. In June, 2005, 92 of these individuals
received residence and belonger certificates.
for those applying for residency status after January
1, 2003 are limited to no more than 25 persons per
year. The government also stressed that in all cases,
individuals cannot be away from the BVI for more than
90 days in any calendar year if they want to qualify
for residency status.
acknowledged that controlling immigration in the territory
represented a “very serious challenge” for the government,
and explained that a balance must be struck between
welcoming outsiders and protecting the privileges
afforded to BVI citizens.
the issue of immigration reform has not yet been settled
conclusively, and in March 2008 Premier and Minister
of Finance Ralph O’Neal announced in his budget
speech that comprehensive immigration reform would
be a priority that year.
will amend existing legislation to implement additional
control measures. Current legislation will be reviewed
to ensure compliance with international laws, human
rights and other conventions. As we embark on the
reform process, we will ensure citizen participation
by conducting regular consultations with representatives
of the community, advocacy groups and other private
sector organisations," he revealed.
part of this process, the government began that year
to streamline immigration procedures by creating a
"one-stop process" for obtaining entry permits
and work permits.
Further details of the
BVI's immigration and work permit rules can be obtained
from the Immigration Department at: