Guide For Offshore Corporate Services In The British Virgin Islands

Tortola City View in the BVIGuide For Offshore Corporate Services In The British Virgin Islands (BVI)

About The British Virgin Islands

The British Virgin Islands (BVI) are a British dependency located in the Eastern Caribbean, about 80 kilometres East of Puerto Rico. 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 centre 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.

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 but came under British rule in 1666. First inhabited by Arawak and later by Carib Indians, the Virgin Islands were settled by the Dutch in 1648 and then annexed by the English in 1672. The islands were part of the British colony of the Leeward Islands from 1872-1960; they were granted autonomy in 1967.

All BVI citizens are British citizens and can travel on a UK passport and work in the UK and in the EU. The citizens of the Territory are called British Virgin Islanders.

The great majority of British Virgin Islanders are the descendants of African slaves. Those of European descent constitute a small minority, although their number grew markedly since 1960, as the number of immigrants from the United States and Great Britain increased. Of all the islands, Tortola has by far the largest population, some four-fifths of the total. About one-fourth of all Tortolans live in Road Town.

English is the official language and the official currency is the United States Dollar. The Government is stable and promises to remain that way. There is good commercial and professional infrastructure and the Government is actively encouraging the development of the offshore finance business and has now upgraded the Companies Registry by installing state of the art technology.

The British Virgin Islands are a geologic extension of the central fault-block mountains of Puerto Rico and present a variety of physical features, including low mountains, lagoons with coral reefs and barrier beaches, and landlocked harbour.

The British Virgin Islands has a hybrid culture that mixes European, African, and Caribbean elements. Sailing is the favourite sport on the British Virgin Islands, which has been called the “sailing capital of the Caribbean.” Most locals learn to sail as children, and the activity is a popular attraction for tourists; anything from small, simple bare boats to fully equipped and crewed luxury yachts can be rented or chartered.

 

Infrastructure

The British Virgin Islands consist of the main islands of Tortola, Virgin Gorda, Anegada and Jost Van Dyke, along with over fifty other smaller islands and cays. Approximately fifteen of the islands are inhabited.

With access to major shipping routes and the Panama Canal, the U.S. Virgin Islands provides strategic market access to the U.S., Latin America, Europe and Asia.

Companies will find that state-of-the-art infrastructure and communication systems are already in place in the USVI, including International airports with direct cargo and passenger flights, Container and bulk shipping, One of the deepest natural water harbours and most modern highway systems in the Caribbean, Developed freight and transportation systems, Fiber-optic broadband for high-speed Internet access territory-wide.

The BVI is well served by air transportation and international communications. It is in the Atlantic time zone, making it the same time as Eastern Standard Time (New York, Toronto) in the summer and one hour earlier in the winter. There is no Daylight Savings Time in the BVI.

 

Economy

The British Virgin Islands (BVI) is a UK overseas territory. Its economy is dependent on tourism and financial services. The economy is closely tied to the larger and more populous US Virgin Islands to the west. Livestock raising is the most important agricultural activity; poor soils limit the islands’ ability to meet domestic food requirements.

In the mid-1980s, the government began offering offshore registration to companies wishing to incorporate in the islands, and incorporation fees now generate substantial revenues. Roughly 400,000 companies were on the offshore registry by year end 2000. The adoption of a comprehensive insurance law in late 1994, which provides a blanket of confidentiality with regulated statutory gateways for investigation of criminal offenses, made the British Virgin Islands even more attractive to international business.

The British Virgin Islands has a much higher standard of living than most of the non-U.S. Caribbean; moreover, the BVI is a small country, with a very successful financial services sector. Revenues from international financial business provide the largest single contribution to BVI government revenues. Thus “membership” in the CBI, which is a form of economic assistance program but which also requires an arrangement to share financial information and records, has no attraction for the BVI.

 

Type of Law

The law of the British Virgin Islands is a combination of common law and statute, and is based heavily upon English law.

Law in the British Virgin Islands tends to be a combination of the very old and the very new. As a leading offshore financial centre, the territory has extremely modern statutes dealing with company law, insolvency, banking law, trust law, insurance and other related matters.

However, in a number of areas of law, such as family law, the laws of the British Virgin Islands are based upon very old English laws and can cause some difficulty in modern times. Other areas of law, such as international law, are essentially regulated externally through the Foreign and Commonwealth Office in London by Order in Council.

A large body of the laws of the British Virgin Islands consists of the common law, which continually updates itself through judicial precedent in the territory and in other common law countries.

 

Central Bank

The BVI Financial Services Commission is the Territory’s single regulatory authority for financial services business.

 

Anti-Money Laundering: ​FATF Status

The AML legislation is extra-territorial in the sense that underlying criminal activity that occurs outside of the British Virgin Islands may be considered relevant criminal conduct for the purposes of the predicate offences that arise under the AML and terrorist financing regime.

Medium Risk British Virgin Islands is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Neither The Financial Action Task Force (FATF on Money Laundering) or The Organization for Economic Cooperation and Development (OECD) has ever blacklisted the British Virgin Islands as a country forming offshore corporations. This means that international finance watchdog organizations. have long considered BVI as “white” (clean) financially.

The British Virgin Islands is a member of the Caribbean Financial Action Task Force (CFATF).

Member of Caribbean Financial Action Task Force (CFATF)

In November 1996, 21 members of the CFATF entered into a Memorandum of Understanding which now serves as the basis for the goals and the work of the CFATF. In this document, CFATF members agree to adopt and implement the 1988 UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances; endorse and implement the FATF Forty Recommendations and the CFATF Nineteen Recommendations; fulfill the obligations expressed in the Kingston Declaration as well as, where applicable, in the Plan of Action of the Summit of the Americas; and to adopt and implement any other measures for the prevention and control of the laundering of the proceeds of all serious crimes as defined by the laws of each Member.

 

Corporate Entities

The British Virgin Islands Business Company (BVI BC) is the most popular offshore legal entity in the world. Over 40% of all global offshore corporations are registered in the BVI.

A BVI company is a corporation one or more people or entities form in the British Virgin Islands. The term International Business Company or IBC is the official name for what most people think of as “offshore companies” according to Fidelity. An IBC is a private corporation.

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.

 

Taxation

The country does not impose any taxes on offshore accounts, and it has no tax treaties with other nations, thus protecting the financial privacy of bank account holders.

There are no taxes on offshore companies, and BVI IBCs pay no taxes on profits or capital gains generated from outside of the BVI. The only monetary payment an offshore corporation must make to the BVI government is an annual business license fee.

However, the US government requires its citizens to report all income to their tax authorities. Many other countries require their residents to pay tax on worldwide income as well.

Although many Caribbean jurisdictions do not have actual tax treaties with the U.S. or Canada, many have, under pressure, signed some form of information sharing agreement, often under the Caribbean Basin Initiative (CBI).

 

National Flag of the British Virgin IslandsRegistration of offshore companies

A BVI company is a corporation formed in the British Virgin Islands under the BVI Business Companies (BC) Act of 2004, which regulates all corporations. In spite of having the same features as a corporation, the BVI calls the types of businesses they permit to interact financially with non-residents of the BVI business companies.

The incorporation time for a BVI company is short and any future administration simple and cost-efficient. A BVI company offers a high level of privacy and confidentiality.

BVI company law provides minimum obligation to file any returns or reports. BVI BC’s are not obliged to prepare or file financial accounts, annual returns or records. Also, there is no requirement to prepare and file financial declarations that are usually associated with income tax reporting.

BVI Company Types:

The BVI Business Companies Act of 2004 permits the formation of five kinds of business companies:

  • Business companies that are restricted by shares;
  • Business companies restricted by a guarantee stating the company cannot issue shares;
  • Business companies that are both restricted by a guarantee and can issue shares;
  • Business companies that are unlimited but cannot issue shares; and
  • Business companies that are unlimited and can issue shares.
Classes of Shares permitted

Registered shares, bearer shares, shares of no par value, preference shares, redeemable shares and shares with or without voting rights. Nominee shareholders are permitted.

Bearer Shares permitted

The BVI Business Companies Act 2004 also provides for a possibility to configure a Business Company with shares issued in bearer form. While representing the ultimate way of ensuring the anonymity of offshore company owners, at the moment the use of bearer shares is strictly limited by law. The schedule of Government fees for BVI BC’s contains a clear negative incentive against using bearer shares in the structuring of the Business Companies, as the Government fees for such companies are substantially higher. In addition, the bearer shares may not be issued to their actual owner but may only be kept in custody of a licensed custodian in the BVI, or outside the BVI, together with a written indication as to the actual identity and address of the owner of such shares.

All these new legal provisions do not completely prohibit the potential application of bearer shares but they certainly make this option less appealing and substantially more costly than using nominee shareholder services.

 

Types of Capital for BVI

Authorized share capital

Authorized share capital is the total amount of money that the company is allowed to cash in from the shareholders in return for giving out its shares to them. It is that amount of money which the principals of the company have decided to put together in order to start business until the company brings enough revenues to support its operations.

In most offshore jurisdictions there is a minimum required authorized share capital, and the share capital selected usually affects the fixed government fees payable. In British Virgin Islands, there is more flexible alternative: BVI Business Companies may choose to state only the number of shares for issue, but they do not have to determine the monetary value of their capital. Thus, the company may issue its shares at a “market value”, or at a value that depends on the capitalization requirements of the company.

The normal authorized share capital is US$ 50,000 divided into shares with or without par value. The share capital may be expressed in any currency. The minimum issued capital may be one share of no par value or one share of par value. Actually, any share capital is permitted, but additional government fees apply for the use of No Par Value Shares ($50) and authorized capital over $50,000 or equivalent ($700).

In the BVI, a company with the same 50,000 shares may decide to issue its shares with value of one US cent, or one hundred Euros, or five thousand pounds sterling each, thus raising substantially different amounts of capital from its potential shareholders.

Structural flexibility as provided by the BVI Business Companies Act is very useful; modern business situations can have many variants. A company may not need a single dollar of capital, if it has a super-original business idea or it may need to have high amount of capital for a cash-intensive project.

Subscribed capital

Subscribed capital is the amount of money that the prospective shareholders actually agree to invest in return for their shares. The subscribed capital can quite often be less than the authorized capital. This simply means that the company has actually issued (or sold) only a part of its shares to the shareholders, whereby the remaining shares are not issued yet.

Paid-up capital

The subscribed capital is transformed into paid-up capital when the subscriber when the subscriber actually honours his part of the deal and pays for his shares to the company. In most cases that simply means that the shareholder has paid some cash into the company. Usually, only when the shares are paid-up, the shareholder receives the right to get profits from the company and to vote in the shareholder’s meeting. Terms and procedures of paying-up the company capital and the rights of shareholders are usually set forth in the Articles of Association of a company.

 

BVI Offshore Advantages

The British Virgin Islands is by far the most popular jurisdiction in the world for International Business Companies (IBCs). The international financial and tax planning community can and does seek out those jurisdictions which best accomplish its various requirements. The reason for this BVI in offshore company formation lies its unique combination of those factors that are most important to the diverse elements that make up the international financial community.

Some of the more important factors contributing to the success of the British Virgin Islands are:
  • the BVI are a British Overseas Territory, with the inherent political stability that this brings.
  • the BVI has been free of major political scandal, unlike many other Caribbean offshore centres.
  • the currency of the BVI is the U.S. dollar and there is no domestic currency whatsoever. Not only are there no currency controls, but with the US$ used as the BVI currency, it is essentially impossible for the government to regulate the money supply and hence to ever impose currency controls.
  • Despite its international popularity as an offshore financial centre, the BVI does not have the high profile, attention getting reputation of other centres.
  • It represents an ideal offshore location for clients seeking confidentiality without the ‘red flags’ that are often raised through the use of more well publicised centres.
  • The BVI is by far the most popular jurisdiction in the world for IBCs because it provides the best combination of those qualities that the international financial professionals seek out when establishing such companies for their clients.

 

General Features of Offshore Entities In The British Virgin Islands

Type of Entity

  • BC

Minimum Government Fees (Excluding Taxation)

  • USD450

Corporate Taxation

  • None on Foreign Profits

Double Taxation Treaty Access

  • No
Share Capital

Standard Currency

  • USD

Permitted Currencies

  • Any

Usual Authorized

  • USD50,000

Minimum Paid-up Capital

  • USD1.00
Directors or Managers

Minimum Requirement

  • One

Requirement of Local Resident

  • No

Public Access to Company Records

  • No

Required Location of Meetings

  • Anywhere
Members

Minimum Number

  • One

Public Access to Company Records

  • Optional

Required Location of Meetings

  • Anywhere
Company Secretary

Requirement of Company Secretary

  • Optional

Local or Qualified            

  • Not Required
Accounts

Requirement to Prepare

  • Yes

Audit Requirements

  • No

Requirement to File accounts

  • No

Public Access to Accounts

  • No
Annual Return

Requirement to File Annual Return

  • No
Others

Permission for change of Domicile

  • Yes

 

Specific Features of Offshore Companies In The British Virgin Islands

Currency

  • United States Dollar (USD)

Language

  • The official and spoken language is English.

Exchange Control

  • None.

Principal Corporate Legislation

  • The Companies Act (Cap. 285) and The International Business Companies Act (Cap. 291).
Type of Company for International Trade and Investment
  • The British Virgin Islands International Business Company.

Restrictions on Trading

  • BVI BCs cannot trade within the British Virgin Islands or own real estate there. Cannot undertake the business of banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management, trusteeship, the rendering of investment advice or any other activity that would suggest an association with the banking or insurance industries.
  • Cannot offer its shares for sale to the public.

Powers of Company

  • A company incorporated in the British Virgin Islands has the same powers as a natural person.

Language of Legislation and Corporate Documents

  • The language of BVI’s legislation and corporate documents is English.

Language of Name

  • Latin Alphabet. Any name in a language other than English must be accompanies by a translation to ensure that the name is not restricted.

Requirement of Registered Office

  • Yes, Registered Office must be maintained in BVI at the address of a licensed management company.

Name Restrictions

  • Any name that is identical or similar to an existing company, or any name that suggests the patronage of the Royal Family or the Government of the British Virgin Islands.

Names Requiring Consent or Licence

  • Any name which suggests an association with the banking, trust company, insurance, mutual fund, assurance or reinsurance industry.
  • Any name which suggests the patronage of royalty or of the British Virgin Islands government.

Suffixes to Denote Limited Liability

  • Limited, Corporation, Incorporation, Societe Anonyme, Sociedad Anonima, or the relevant abbreviations (Ltd., Corp., Inc., S.A.)

Disclosure of Beneficial Ownership to Authorities

  • No

 

TERMS AND CONDITIONS:
  • Source of Information, Guidelines, Compliance, Laws, Rules & Regulations is from the relevant authorities of respective jurisdictions.
  • The Acts in respective jurisdictions are subject to change by the regulatory authorities.
  • We have published the guidelines with most updates from our Associate Firms.
  • The Customers would be notified with the updated Acts with oncoming changes if applicable when the Offshore services are rendered by us.

 

Please refer to our SERVICES for more information or CONTACT us if you wish to avail these or many other services.
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