British Virgin Islands - Background Information

The British Virgin Islands are a British Dependant Territory composed of over 50 islands, islets and cays located approximately 60 miles (95 kilometres) East of Puerto Rico.

The government consists of a British appointed Governor and thirteen democratically elected members of a Legislative Council who, in turn, elect Ministers.

There are no capital gains taxes, inheritance taxes or death duties in the Territory. Government revenues are derived from local income tax, import duties, stamp duties, license fees and company fees.

The Territory has adopted the U.S. Dollar as the local currency. There are no exchange controls and no restrictions on the free movement of funds.

In recent years the British Virgin Islands has become a significant international finance centre. The government seeks to maintain and enhance the Territory's reputation in international finance through a policy of ongoing consultation and active support of the offshore industry.

The World's Most Popular Offshore Jurisdiction

The British Virgin Islands is by far the most popular jurisdiction in the world for International Business Companies (IBC's).

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 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.
  • 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 later in the winter.
  • 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).  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.
  • 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.
  • IBC formation legislation in the BVI is both modern and very flexible; in fact it is the model upon which much of the other Caribbean IBC formation legislation is based.  The legislation requires only one shareholder and one director (both of which may themselves be other corporations); no corporate officers are required; bearer shares are permitted; there is no requirement for an annual general meeting; the company need only keep such accounts and records as the Director(s) think appropriate.  The BVI government need not be informed of the identity of the IBC's shareholders or directors.  Many of the benefits of the BVI flow from this combination of a very high level of flexibility and the unquestioned confidentiality.

 

The BVI is by far the most popular jurisdiction in the world for IBC's because it provides the best combination of those qualities that the international financial professional seeks out when establishing such a company for his clients.

 

Domestic Companies are incorporated under the Companies Act Cap. 285 of the laws of the British Virgin Islands.  A Domestic Company may do business within the territory and, subject to its Memorandum of Association, anywhere else in the world.

 

A Domestic Company is designated as resident if its principal business is carried on in the Territory or if a majority of its directors reside in the Territory.  It is designated as non-resident if its principal business is carried on outside the Territory and a majority of its directors do not reside in the Territory. Non-resident BVI companies are liable to BVI tax (at the standard corporate tax rate of 15%) only on income from the Territory.

 

International Business Companies (or IBC's) are companies incorporated under the International Business Companies Ordinance 1984.  This Ordinance provides for the establishment of tax exempted companies with extended privileges and contains strict confidentiality requirements.  It provides for the re-domiciliation of companies from other jurisdictions in the Territory and also provides for companies to move their domicile out of the Territory, to be continued elsewhere.  International Business Companies are by far the most popular and widely used type of company.