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Geography & People
The British Virgin Islands are a British Dependent Territory composed of over 50 islands, islets and cays located approximately 60 miles (95 kilometres) East of Puerto Rico. The total land area is approximately 60 square miles (155 square kilometres) and the total population is approximately 18,000. The principal island is Tortola, with a population of about 13,500. The capital of Road Town is located on Tortola. Access to the islands is easy by air and sea; the main gateways are Puerto Rico and the U.S. Virgin Islands, which lie immediately to the west. The Territory is politically stable and has a high level of internal self-government.
Government
The government consists of a British appointed Governor and thirteen democratically elected members of a Legislative Council who, in turn, elect Ministers. The Executive Council of the Territory consists of the Governor, the Ministers and the Attorney General. The United Kingdom, through the Governor, is responsible for defence, external affairs, internal security, and the administration of justice. The legal system is primarily based on that of Great Britain and there is legislation to regulate and protect corporate, banking, trust and insurance operations. All domestic matters are legislated locally, by the legislative Council, including taxation.
Taxation
There are no capital gains taxes, inheritance taxes or death duties in the Territory. Revenues are derived from local income tax, import duties, stamp duties, license fees and company fees. The British Virgin Islands are a party to two double taxation treaties, with Japan and Switzerland, which the United Kingdom entered into many years ago. These treaties were extended to cover the British Virgin Islands, although the Territory does not have a tax treaty with the United Kingdom itself. There are no plans to negotiate any new tax treaties.
Currency
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. The major banks in the Territory are Barclays Bank PLC, the Bank of Nova Scotia, Chase Manhattan Bank NA and Banco Popular. There are also a small number of private banks. In recent years the British Virgin Islands has become a significant international finance center. 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.
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| Taxation Benefits |
| a) |
International Trading and Purchasing
(e.g. Cross Border Transaction) (More Info)
One of the common uses of a Company incorporated in a low tax rate area is for international trading. Significant tax saving opportunities can arise by interposing an offshore company into an international trading transaction. If an offshore company was to procure products from one country and sell to another country the profits arising out of the transaction may be accumulated in the offshore company, free from taxation in the offshore centre.
Another common use of an offshore company is for bulk purchasing. Such a structure is typically established by a group of associated and un-associated companies to benefit from economies of scale and reduced administrative costs. Moreover, such a structure may be more tax efficient that onshore arrangement. |
| b) |
International Investment
High net worth individuals often use offshore companies as personal holding companies to hold investments made in a number of different markets and countries. Personal holding companies can provide privacy and may save the professional and other fees associated with setting up and maintaining entities in a number of different structures.
In this connection, offshore companies are regularly used for inheritance planning and to reduce the cost and time delays associated with probate. |
| c) |
Personal Services
Individuals engaged in the provision of professional services in the professions and in the construction, engineering, aviation, finance, computer, film and entertainment industries can achieve considerable tax saving benefits through the establishment of a personal service company, based offshore. The offshore company can contract to supply the services of the individual outside the country in which the individual is normally resident and the fees earned can accumulate offshore, free from Taxation in the offshore centre. Payments to the individual can then be structured in such a way to minimise income tax. |
| d) |
Trademarks and Copyrights, Licensing and Franchising
Intellectual property, including computers software, technical know-how, patents, trademarks and copyrights can be owned by or assigned to an offshore company. Upon the acquisition of the rights, the offshore company can then enter into license or franchise agreements with companies interested in the exploitation of such rights around the world. The income arising from such arrangements can be accumulated offshore and by careful selection of an appropriate jurisdiction, withholding tax on royalty payment can be reduced by the commercial application of double taxation treaties. The UK, Netherlands, and Mauritius are good examples of jurisdiction for holding intellectual property. |
Anonymity of Beneficial Owners
For strategic planning and commercial reasons, certain offshore companies with bearer share facilities can be used to conceal the identity of the beneficial owners.
Hassle-Free Incorporation Procedure with Minimal Statutory Requirements
In some jurisdictions, filing of annual returns and submission of accounts are not required.
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| a) |
Political and Economical Stability
Political and economical stability in an offshore jurisdiction is essential in ensuring that business can be conducted with certainty, confidence and corporate security. |
| b) |
Taxation
A distinct advantage of an offshore corporation for many clients is the absence of income tax or other taxes on the profits or assets of the offshore company. For others, the status use of double tax treaties may provide significant tax planning opportunities. The tax legislation of the offshore jurisdiction should be appropriate to meet the objective of each client.
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| c) |
Infrastructure
In order for the international businessmen to operate their offshore companies efficiently and with complete flexibility, it is important for the offshore jurisdiction to have access to international standard banking facilities, professional services and state of the art telecommunications.
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| d) |
Legislation
This is essential to provide the flexibility and simplicity generally required by international businessmen. The offshore corporate legislation should include inter alia, provisions on issue such as issue of bearer shares; optional audit of accounting records; minimal capitalisation requirement; appointment of nominee directors; maintenance of a local registered office and resident agent; minimal or optional corporate filing obligation; flexibility for holding meetings of shareholders and directors; and the ability to transfer the corporation from one jurisdiction to another. |
| e) |
Confidentiality
An important consideration for many clients is the privacy offered by offshore corporation. To enhance the clients' desire for the privacy in their international business dealings, the confidentiality provisions of the offshore jurisdiction should be expressed by statute. |
| f) |
Cost of Formation and Maintenance
The benefits of having an offshore company must be greater than the costs of formation and maintenance.
BVI is one of the most established zero-tax jurisdiction and it is deemed to have met all market; it is almost a household name, like the brand name "IBM" in the computer industry. So when business people decide to use offshore companies in their business structures, most will find comfort in joining the ranks of their peers who would most probably own a BVI company. Secondly, the BVI laws are fashioned after the British Common Law and all documents are in English- a most widely used and accepted business language. This familiarity also contributes to the preference for BVI.
An offshore company can open a bank account anywhere in the world, just like a singapore-incorporated company. However, it is advisable that you check with your banker before venturing forth as different banks have varying degrees of requirements. While some banks may open an account after ascertaining that the company and its officers are bona fide, others may require a host of costly documentation to be completed before any business relationship can commence.
Company searches can be carried out in BVI companies. However, you should note that due to the limited information filed with the public Registry, the search will only reveal the following information:
| i) |
Name of company |
| ii) |
Registration number of the company |
| iii) |
Date of incorporation |
| iv) |
Authorised capital |
| v) |
Name & address (also the registered office of the company) of the registered agent. |
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