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British Virgin Islands BVI Offshore IBC Company Formation bvi
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BVI Company Registration  

 

British Virgin Island Company Formation (BVI)


The British Virgin Islands (BVI) are a chain of 60 islands, cays and rocks located in the Caribbean Sea 90 miles east of Puerto Rico however only 16 Islands are inhabited. The four major islands are Tortola, Virgin Gorda, Anegada and Jost Van Dyke. The Islands are a dependent territory of the British Crown, and a member of the Commonwealth. Neither British Airways nor the other major airlines fly direct to the BVI from the UK. Travelling to the Islands is a long and exhausting 12 hour haul with a minimum of a two hour transit in Antigua before arrival at Beef Island. This makes travel for disabled passengers and families with young children very difficult. Beef Island is connected to Tortola Island and the capital Road Town is only 30 minutes taxi ride. Once there it is definitely worth the effort but company director, shareholder and beneficial owner travel is not necessary to incorporate a company or set-up a trust in the jurisdiction and take advantage of the island’s tax free corporate law.

Advantages of the BVI Offshore Company Formation


Company Formation expertise
Value
Secrecy
Banking services
Legal system
Political stability in the BVI
Prestige


bvi offshore company fee schedule

The BVI follows English common law and has adopted its standard business formations. The ordinary resident company limited by shares is usually formed for the purposes of carrying on local business. An ordinary non-resident company limited by shares is subject to the same rules as a resident company. Companies limited by guarantee can be resident or non-resident. A public company formed under the Companies Act is similar to a private company limited by shares except that it must have 5 or more members, and the restrictions listed above do not apply. Limited partnerships, Trusts and the International Business Company, which 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 now more than 500,000 IBCs, with Hong Kong and Latin America the main source of clients. The great majority of existing IBCs have been formed as asset protection vehicles, quite often in tandem with trusts, either to hold shares or other types of asset. The BVI have an excellent business infrastructure with good telecommunications; this coupled with the widespread use of the English language and a legal system largely based on English law makes the island a very convenient and effective business base. The very large numbers of offshore companies, trusts, insurers and mutual funds on the islands are supported by a well-developed and diverse professional services sector and the Government is responsive to the needs of business. Its legislation is mostly flexible and straightforward with regulatory structures to avoid money-laundering and other criminal activity.

It is a relatively cost effective jurisdiction and the incorporation process can take no more than one day; however, for banks, trust companies and insurers the process is lengthier.

BVI Company Formation

Offshore operations may take the following forms: Non-Resident Private Company Limited by Shares; Non-Resident Private Company Limited by Guarantee; Non-Resident Hybrid Company; International Business Company; International Limited Partnership and the Trust.

The International Business Company is the most widely used vehicle for offshore operations in the BVI; it normally takes the form of a private company limited by shares. The governing legislation is the International Business Companies Act 1984, updated by the International Business Companies (Amendment) Act 1990 and the International Business Companies (Amendment) Acts of 2003 and 2004.

As with many other jurisdictions IBC status is granted subject to certain stipulations
:

  • Local business activities are prohibited;
  • No ownership interest in real property in the BVI is permitted, property may be leased for office use only;
  • Banking or trust insurance or re-insurance business may be carried on only if an appropriate license is issued;
  • Engaging in the business of company management or providing registered facilities for BVI incorporated companies is not permitted.
IBCs are permitted to own shares in other BVI companies, maintain bank accounts in the jurisdiction and employ the services of local professionals.

Under the International Business Companies (Amendment) Act 2003, from December 31, 2004, all international business companies (IBCs) located in BVI will be required to establish and maintain a Register of Directors, and must appoint their first director within 30 days of the IBC's incorporation. Other statutory requirements however remain minimal, and flexible:


  • Only one director and one shareholder are required;
  • Shareholders, directors and officers need not be resident in the BVI and there is no stipulation as to their nationality;
  • There is no minimum capital requirement, shares may be either registered or bearer and may be issued in any currency (bearer shares now have to be deposited with an authorised intermediary, who must record the identity of the beneficial owner);
  • Accounts need not be kept, if they are kept there is no requirement for an audit;
  • No returns are needed of shareholders, directors or officers;
  • Shareholders' and directors' meetings need not be held in the BVI and can be held by telephone;
  • Confidentiality is guaranteed the Memorandum and Articles of Association are the only documents to be held on the public record;
  • The IBC Ordinance allows a company incorporated outside of the BVI to be re-domiciled in the BVI under the 'continuation' features of this Ordinance;
  • The name of the corporation may be in any language. It must contain the word(s) Limited, Corporation, Incorporated, an equivalent, or an abbreviation;
  • It is usual to use a registered agent in the BVI to incorporate an IBC eventually it is obligatory to appoint one anyway.

British Virgin Island Trusts

Trust Management has been a major activity in the British Virgin Islands for 30 years or more. Originally the Trust was used primarily by wealthy individuals from the major common law countries, but it is now accepted as a major technique of asset protection in all parts of the world. Trusts in the BVI have a basis in common law, The trust law of the British Virgin Islands is based on English trust law. BVI Trusts are formed under the Trust Ordinance 1961 (based on the English Trustee Act 1925), as updated and amended by the Trustee Amendment Act 1993.

Since the 1993 Act, there is no requirement for registration of trusts in the BVI, and there is no public disclosure of information regarding trusts and trustees are exempt from any need to file annual returns and from any other reporting requirements. Trust duty of $50 is payable on each trust instrument, which is achieved by buying and affixing stamps, creating no record. The Amendment Act introduced a fixed perpetuity period not exceeding 100 years.

The majority of BVI trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction. The Amendment Act provided for the appointment of a 'protector of trust', effectively a supervisor of the trustee(s), and also managing and custodian trustees. A company offering trust services must obtain a licence under the Banks and Trust Companies Act 1990 and conform to various conditions.

In 2003 the BVI enacted legislation implementing proposals made by the Society of Trust and Estate Practitioners (STEP) to reform trust law in the BVI. Three separate statutes will modernise BVI trust law. Further, the BVI Special Trust Act creates the “VISTA” trust. The Act allows a person to set up a trust to hold shares of an underlying BVI international business company without the usual constraints of English trust law.


Taxation

In the British Virgin Islands there is no capital gains or capital transfer tax, no inheritance tax, and no sales tax or VAT. The main tax for resident companies is income tax; there are also stamp duties on certain transactions, and property taxes. IBC are exempt from income tax and stamp duty.

Banking

Banks are regulated under the Banks and Trust Companies Act 1990, and supervised by the Inspector of Banks, Trusts and Company Managers. Banks are licensed in three categories: A General Banking License permits all forms of banking activity; A Class 1 Restricted Banking License permits international business only; A Class 2 Restricted Banking License permits the conduct of banking business only with counterparties named in the licence.

The banking sector has been limited to a small number of international banks as part of the jurisdiction’s determination to exclude money-laundering. There are currently 7 banks in the BVI, including Barclays Bank and Chase Manhattan.

Employment Law in the BVI

Labour regulation in the BVI is very light. There are no or trade unions in the BVI. Most pay bargaining is carried out directly between employers and employees. There is legislation setting a low minimum wage.

In order 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 the job.


BVI Geography, People Culture

The BVI is approximately 153 square kilo meters (59 square miles); Tortola, 54 square kilo meters (21 square miles); Anegada, 39 square kilo meters (15 square miles); Virgin Gorda, 21 square kilo meters (8 square miles) with a sub-tropical climate. The population of 19,000 is of mixed Black (90%), White, Chinese, Indians, Portuguese, Middle- East origin. English is the official language, Spanish is also spoken Literacy: 98.2% of the total population.


Immigration and Residency

All non-residents, including British citizens, require a passport to enter the BVI, except that Canadian and US citizens need only a birth certificate, certificate of citizenship or voter registration card.

Visas are given for up to six months stay provided that there is a return or onward ticket and evidence of sufficient funds.


Legal and Political System

The Government of the British Virgin Islands is a constitutional democracy with the Executive Authority vested in, Queen Elizabeth 11 this democracy operates through parliamentary and ministerial systems. The Parliament or Legislative Council has thirteen representatives elected for a maximum of four years via a mixed system of nine districts and four country-wide. The government has three branches: the Executive Council, the Judiciary and the Legislative Council.

The Governor, as the representative of the Queen, has special responsibility for the Courts, the Public Service, the Police, and Foreign Affairs.

The Executive Authority of The Virgin Islands is vested in the Governor, who, as the Queen's representative, exercises these powers on her behalf either directly or through officers subordinate to him. While he retains personal responsibility for certain functions, the Executive Council which advises him in the execution of all other executive powers may be considered in those respects as the highest policy-making body in the territory. The Executive Council, which is established by section 14 of the Virgin Islands (Constitution) Order 1976, is charged with the general direction and control of the Government of The Virgin Islands and is collectively responsible therefore to the Legislative Council.

Elections in 2003 saw a victory by the National Democratic Party.


BVI Economy

The BVI economy has grown and undergone significant changes over the past decade. In particular, the tourism sector has expanded noticeably, as well as the offshore business sector. The two export sectors now account for more than 70% of gross national product, 65% of all incomes from employment, and 75% of Central Government’s recurrent revenue, annually. Our economy diversified from tourism into offshore financial services.

Through the last decade the British Virgin Islands have seen stable growth, the economy has been transformed into a fullly fledged international trade centre with strong public sector leadership and investment. Past policies provided an environment conducive to private sector initiative, as evidenced by the 800 new trade licenses issued and the 450 new corporate entities. The commercial legal framework has been strengthened, bureaucratic procedures have been simplified in some industries, and tax and franchise incentives have been employed to encourage both domestic and foreign investors. Technical assistance programmes, business seminars, and workshops have recently been initiated to assist the small business sector.

BVI Company Incorporation

Legislation affecting offshore companies and non resident business

If you require more information on may particular statute please contact us.

Anti-Money Laundering Code of Practice (2000)
Banks and Trust Companies Act 1990
British Virgin Islands Trustee Act
Companies Act 1963
Financial Services (International Co-operation) Act 2000
Financial Services Commission Act 2001
Financial Services Commission (Amendment) Act of 2004
Hotel Aid Ordinance
Insurance Act 1994
Insurance Regulations 1995
International Business Companies Act 1984
International Business Companies (Amendment) Act 1990
International Business Companies (Amendment) Act 2002
International Business Companies (Amendment) Acts of 2003 and 2004
Limited Partnerships Act 1996
Mutual Funds Act 1996
Pioneer Services and Enterprise Ordinance
Public Funds (Sub-Class) Regulations 1997
Trustee Amendment Act 1993
Trustee Ordinance 1961

 
 
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