Offshore Company Formation in BVI
Updated on Saturday 28th September 2024
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British Virgin Islands (BVI) are considered a tax haven by both local and foreign investors. In the British Virgin Islands, there are no capital gains tax, no corporate tax, no profit tax, no value added tax or sales tax, no gift tax, no estate duty and no inheritance tax. Offshore company formation in BVI can be a good investment decision as the income from dividends, royalties, interest is also not taxed.
There are no withholding taxes for payments made to non-residents. Thus, businessmen who are seeking for a suitable destination for offshore company setup can find here many advantages, especially in the form of tax exemptions.
Steps for company formation in BVI
In order to incorporate an offshore company in BVI, several steps have to be considered. The company (known as International Business Company) has to submit the Memorandum of Association and the Articles of Association at the Companies Registrar.
This process is made through the registered agent, which must sign all the documents on behalf of the investor. When incorporating a company, investors must also provide information on the following:
This process is made through the registered agent, which must sign all the documents on behalf of the investor. When incorporating a company, investors must also provide information on the following:
- the name of the company;
- the address of the registered office;
- the appointment of the registered agent;
- the name of the shareholders and the number of shares issued to them;
- the name of the director of the company.
This is private information contained by the First resolution. The documents mentioned above are also signed by the registered agent. Our consultants can provide further details on this subject. You can rely on our team if you want to start the process of offshore company formation in BVI.
Annual fees obligations for businessmen in BVI
The annual license fee must be paid, with a value that varies based on the type of company incorporated (minimum USD 550). The annual fees that are paid by companies in BVI have been modified starting with January 1st, 2023 following the enactment of the BVI Business Companies (Amendment) Act 2022.
Under the new amendments, the fees have been slightly increased and companies that can issue up to 50,000 shares are required to pay the USD 550 fee, while companies that can issue more than 50,000 shares must pay a fee of USD 1,350. These fees are charged upon incorporation, but also as annual renewal fees.
The usual time frame for incorporating an offshore company in BVI is around 3 business days. As a note, international business companies are not obliged to submit annual returns or financial accounts. This is considered another advantage of owning an offshore company in the British Virgin Islands.
Requirements for offshore company formation in BVI
There is no minimum share capital required at incorporation of a company limited by shares in BVI. An IBC established in BVI must have a registered agent, resident of BVI (a service provided by BridgeWest). The registered office has to be located in BVI.
Minimum one shareholder and/or one director must be appointed after registration - a resident or a foreigner. The shareholder(s) and director(s) can be a natural person or a corporate body. Offshore companies willing to perform business in BVI must open a bank account. IBCs are permitted to own shares in other BVI companies and employ the services of local professionals.
Company limited by shares in BVI
The main act that regulates the way the companies are organized, managed or liquidated is the BVI Business Companies Act. The most common form of business in the British Virgin Islands is the company limited by shares.
The advantage of a company limited by shares is that its founders have limited personal liability for the company’s loss, and the same is true for company’s managers. Provided that the company is liquidated, the founders and directors can’t be held liable for the debts and other obligations of the company, because this legal entity is a separate structure from its founders.
Services provided for BVI company incorporation
Our consultants can assist in drafting the Articles of Association (necessary for company incorporation in BVI). The Articles of Association of the BVI company can be signed through Power of Attorney.
Our team will supervise the drafting of all other documents required for the incorporation of the BVI company. These documents include: Specimen Signatures, Special Forms provided by the Company Registration Office in BVI, passport copies, etc.
We can also assist in finding a registered office in BVI for the company, which is mandatory to have for starting a business in this offshore jurisdiction. The registered office may be any address where the BVI company declares to have its headquarters. Investors can rely on us on setting up a bank account for the BVI company.
Taxes charged in BVI
Offshore companies enjoy a special regime where many taxes are abolished, such as: inheritance fees, estate fees, gift taxes, succession taxes or even income taxes (on interests, dividends, royalties, compensations). The only tax that remains valid is the stamp duty on land ownership transaction.
Land is taxed by acre and the value of the fee is USD 50, but this tax applies only to certain categories of persons. In the list below, you can discover the current land tax system:
- according to the Government of the Virgin Islands, land owned by a BVI company or a local citizen is taxed with a fee of USD 10 for the first acre (or part of an acre) and USD 3 for all other acres owned (or part of acre);
- for land owned by a foreigner, the USD 50 fee is charged for half an acre or any surface of land smaller than half an acre, while if the foreigner owns more than half an acre, the fee is USD 150;
- land tax or property taxes are paid between September 1st and November 30th (those who pay at a later date will be charged with an interest on the amount due);
- land tax and property tax are not charged for a variety of properties, such as hospitals, religious institutions, community centers, burial grounds, schools and other similar locations stipulated under the Education Act 2004.
The annual rental income is taxed with 1.5% annual tax rates. Employers must pay a social security tax of 4.5%, while employees are charged with a tax of 4%. The real estate transactions are taxed with a stamp duty of 12%.
Trusts are exempt from paying taxes if certain conditions are met, such as not performing any commercial activities in BVI, not owning land in BVI and being created by or on behalf of a foreign entity. BVI is included on the whitelist of the Organization for Economic Cooperation and Development, for signing many Tax Information Exchange Agreements.
BVI is being placed alongside major economies like United States, the United Kingdom, Canada, Germany or France, becoming a safe jurisdiction for performing economic activities by the foreign companies. Bridgewest provides company formation services in BVI.
We invite you to address our team if you want to start a business here and you need assistance in the process of opening an offshore bank account. Please contact us for more information and prices.