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British Virgin Islands

Tax Haven Jurisdictions

Synopsis:

Probably the most popular of the Caribbean corporate registration jurisdictions. Excellent efficiency. English speaking. Still a British Colony. Major ship and vessel registration area. Has not suffered from the money 'laundering' scandals associated with the Cayman Islands. No direct tax treaty network even with the United Kingdom. However, Japan and Switzerland include the BVI in their respective tax treaties with the UK.

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Location

The British Virgin Islands comprise 50 islands in the Caribbean Sea, located approximately 60 miles cast of Puerto Rico and adjacent to the U.S. Virgin Islands

Relationship with the UK

The British Virgin Islands are fully autonomous save in respect of defence, foreign affairs, civil service and court administration. The political system features an elected Chief Minister, the head of the Government, and a nine member Legislative Council. The British Crown is represented by the Governor. The legal system is based on English common law and some British statutes have been extended to cover the BVI.

Advantages of a B.V.I. International Business Company ("IBC")

The International Business Company Act (Cap. 291), the IBC Act, is a modem piece of corporate law tailored specifically to the needs of international business. The Act makes it possible for the administration of an MC to be undertaken either in the B.V.I. or from another jurisdiction

Incorporation under the IBC Act provides the following benefits and features:

  • Companies are exempt from all BVI taxes and stamp duty (save for registration and annual license/franchise fees) even though the administration of an IBC may be from within the BVI.
  • There are no minimum issued share capital requirements.
  • A Company is required to have a registered agent and office in the BVI. In most cases, nominee directors will also be employed to allow anonymity to be maintained when dealing with third parties. Otherwise, it may be necessary for an ultimate beneficial owner to reveal his or her identity.
  • Both registered and bearer shares can be issued (and converted from one to another) and the company may acquire and hold its own shares.
  • Only one shareholder is required.
  • Only one Director is required. A company may serve as director.
  • There are no nationality requirements for either directors or shareholders.
  • Directors have power to protect the assets of the company by transferring them to trustees, another company or other legal entities for the benefit of the IBC, its beneficial owner(s) and/or creditor(s).
  • Registered agents are authorised to verify and authenticate the signatures of all company directors and officers including those of the agents concerned. To maintain total anonymity and promote efficiency, the authenticated signature of a director(s) normally belong to, ‘nominees’.
  • The IBC Ordinance allows that a company incorporated outside the BVI may be redomiciled in the BVI under the "continuation" features of this Ordinance.
  • The books and records of the company may be maintained anywhere.
  • No accounts or annual summaries have to be filed with the Government, with the exception of the annual fee form to be completed and filed by the registered agent in the BVI

Taxation

The BVI is a low tax jurisdiction. For instance, personal income tax begins as low as 3% while the maximum payable is only 20% and corporate tax is levied at a flat rate of 15%, which can be lower in certain circumstances. Personal income tax is payable on the or~ income of a resident and, in respect of income arising outside of the territory to a person not ordinarily resident or domiciled in the BVI, only on the amount actually received. Other incentives include no capital gains tax, no estate duty, no dividend withholding tax, no capital transfer tax and no death duties.

How to Incorporate an IBC Company

Any person, natural or judicial, may singly or jointly with others, in the BVI or elsewhere, incorporate an IBC by subscribing to a memorandum and articles of association. The usual procedure is for a nominee to act as incorporator. The directors arrange for the issuance of shares and take all other normal board decisions.

Corporate Requirements

Name: The name of the corporation may be in any language. It must contain the word(s): Limited, Corporation, Incorporated, Sociedad Anonima or Societe Anonyme, or their abbreviations.

Capital: No authorised capital, but US$50,000 usually used. The authorised share capital may be expressed in any currency, and the IBC legislation also allows for a company to have its capital expressed in more than one currency.

Registered Office Agent: All companies incorporated in the BVI must maintain both a registered office and agent in the jurisdiction.

Amendments: The memorandum and articles of association may be amended by either a resolution of the directors or of the shareholders. The amendment must be filed with the Registrar of Companies.

Books, records and common seal: An IBC company is required to have a common seal (which may be kept in or outside of the BVI). An imprint of the seal must be kept at the IBC's registered office. The seal must be used if a company enters into a contract, which, if entered between individuals, would be required by law to be in writing and under seal. An IBC shall keep such accounts and records, as the board considers necessary to reflect the financial position of the undertaking, at the registered office of the company in the BVI or at such other place outside the BVI as it determines.

Powers of attorney: An IBC may grant general or special powers of attorney to any person, to act on its behalf to execute contracts, agreements, deeds and other instruments. These powers are not a matter of public record.

Certificates of good standing: Certificates of good standing for an MC can be obtained upon proper application to the Registrar of Companies.

Register of shares: Shareholder details are not kept on public record. Every IBC is required to keep one or more registers of shares and shareholders, and at least one copy thereof must be kept at the registered office of the company in the BVL To comply with the law, it is advisable that the registered agent be informed of any changes in the register of shares.

Shares: Both registered and bearer shares may be issued (and converted from one to another) and the company may acquire and hold it's own shares.

Directors/Officers/Shareholders: Only one shareholder is required. Only one director is required. A company may serve as a director. Details in respect of the aforementioned are not kept on public record.

Re-domiciliation: A BVI company may transfer it's domicile to a foreign jurisdiction permitting such a transfer. A company organised under any foreign jurisdiction may continue its existence as a BVI company upon the approval of the necessary resolution by it's proper corporate body.

Trusts: The BVI Legislative Council has recently enacted the Trustee Amendment Act, 1993, a modem piece of legislation on trusts. This covers important issues such as:

(i) The trusts established under BVI law are exempted from payments of all BVI taxes and duties; and
(ii) All trusts and settlement deeds made pursuant to the terms of the trust will be exempt from registration; and
(iii) The legislation recognises the right of the trustees to change the proper law for the protection of the trust assets; and
(iv) The law that shall govern a trust where there exists a conflict of law; and
(v) The law that shall govern a trust in a "forced heirship" situation; and
(vi) The rules against perpetuities.

Annual Fees and Government Taxes

The undermentioned fees apply from the next calendar year following the year in which the company was formed. Payment must be made through the licensed registered agent according to the following requirements:

(a) For companies incorporated in the first six mouths of a given year: License Fee is due by the 31st of May, of the following year.

(b) For companies incorporated in the second six months of a given year: License Fee is due by the 30th of November, of the following year.

Therefore. in the BVI the date of initial registration will effect the annual franchise tax date. For example, a BVI company registered in May 1998 would be liable to pay the franchise tax by the 31st of May, 1999. However, an identical company registered in July, 1998 would not have to pay it's franchise tax until the 30th of November, 1999.

Penalties for non payment: As with most similar jurisdictions there are significant penalties for those who do not pay the franchise tax on time. In the case of the BVI, short term surcharges, i.e. where payment is not received within 5 months of the original due date; will vary between 10% and 50%. Thereafter, IBC companies could be struck off the register. Once struck of a company can only be re-instated if additional and further penalties are paid.

Approximate company registration fees: Accepting standard capitalisation the cost of a BVI IBC Company with nominees and a local registered office and agent would be approximately US$1,500.00 to US$1,750.00.

Amendments: Amendments are made in accordance with the terms and conditions outlined in the memorandum and articles of association. In most cases, either the board of directors or shareholders must take important decisions.