You may wonder is BVI a tax haven? In fact, the British Virgin Islands (BVI) ranks first as the world’s top tax haven, holding more than 5,000 times the value of what its economy should hold. Hence, it is proven to be one of the most ideal places in the world for establishing an offshore business. In this article, our team at Tetra Consultants has highlighted the top 5 things you should know before you register company in BVI
Is BVI a tax haven?
To reduce dependency on other countries whilst depending on their own economy, many countries were motivated to become tax-havens. A tax haven is where a country offers businesses and foreign investors with low or no tax liability, enabling it to be an attractive jurisdiction to incorporate businesses.
Most of the Caribbean nations are known as pure tax havens where no taxes are imposed. BVI is one such example where no taxes are imposed on offshore businesses. In addition, since there are no tax treaties with other countries, it possesses tax security, protecting the bank account holders’ financial privacy.
Political and Economic Environment:
BVI operates with only financial services and tourism as its real industries. The national income consists of 60% and 40% of the financial services and tourism industries respectively. Hence BVI economy is relatively undiversified. Even though BVI has a smaller land area and population, it is still one of the most popular offshore financial centers.
Whilst money laundering may be a concern in BVI, there were measures taken such as the signing of Common Reporting Standards (CRS) in 2017 and it continued to adhere to the international guidelines on KYC laws and money laundering initiatives. In addition, the new Beneficial Ownership Secure (BOSS) Act was passed, and beneficial owners can no longer remain anonymous when they are uploaded into the government’s registry.
BVI is democratic and a politically stable economy with no territorial threats or internal tensions within the jurisdiction. BVI is also business-friendly, offering low fees for company registration and yearly renewals. It is more affordable to start a business in BVI compared to other jurisdictions. The lower incorporation fee allows you to channel this fund into other aspects such as expansion through capital investments.
Business Company (BC):
Business Company is the most popular incorporation in BVI. Commonly known as International Business Company (IBC), it was established in the 1984 International Business Companies Act. Since then, it has incorporated more than 600,000 BC and remains one of the most popular places for establishing an offshore business.
BC is a company with limited liability. Since it is a separate legal entity, owners are not liable for the debts and obligations of the company. There are no restrictions for the requirement of at least one director and one shareholder, thus the position of the director and shareholder can be held by the same person. The quick incorporation in the span of 2 to 5 business days makes it a preferred choice by many investors to enjoy the full tax exemption on profits or capital gains generated from outside of the BVI. In addition, the minimum paid-up capital of US$1 is required. The information and details on directors, officers, and shareholders are not required to be filed with the BVI Register of Companies. There is also minimal compliance requirements and no reporting requirements. Hence, privacy is one of the key features of BC in BVI.
Another advantage would be the absence of exchange controls. Hence, funds can be transferred between different countries for trading and investment purposes while financial privacy is protected.
Benefits of a tax haven:
One of the BVI company advantages would be its tax-free nature. Leading accounting and legal businesses internationally enjoy a strong reputation in the BVI. The BVI has also been involved in around 115 Tax Information Exchange Agreements (TIEAs), with countries including China, Japan, United States, India, and Germany, allowing countries to exchange information on tax-related matters formally.
Even though BVI is a relatively smaller country, it has a relatively higher per capita GDP, which exceeds US$43,000. Furthermore, the political stability in BVI is well-known.
BVI Company Registration Process:
Once you have considered and decided to open company in BVI, you may proceed with the preparation. The steps to BVI company registration are as follows:
Step 1: Planning of your business idea
- Think of a business idea that is unique and feasible.
Step 2: Choosing a suitable corporate entity
- There exist many types of business entities but the most popular BVI company formation would be BC.
Step 3: Reserving of the company name and registration through BVI Commercial Registry
Step 4: Obtaining business licenses and permits
- An annual fee of minimum US$350 is required for the renewal of business license
Step 5: Corporate bank account opening
Step 7: Staying compliant
Is BVI a tax haven? After reading this article, you would have found out that BVI is the world’s top tax haven. If you have decided to start a business in BVI but are unsure of what to do, you may engage the service of Tetra Consultants. With Tetra Consultants by your side, the registration process of your business in BVI will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about BVI company registration and our dedicated and experienced team will revert within the next 24 hours.