Deciding on which country or geographical regions to expand your business and operations to can be a complex and difficult decision. In fact, one common region many businesses choose to set up in is the British Virgin Islands (BVI). Yet, as an aspiring entrepreneur, you may be wondering, why do companies register in British Virgin Islands? In this article, Tetra Consultants will offer you valuable insights into why many choose to open company in BVI by explaining various BVI company advantages. We hope that this would help your business make a better and more informed decision about whether you should expand and register company in British Virgin Islands.
For those who are unfamiliar with the British Virgin Islands, let us start with a brief introduction about the place. The BVI is a British overseas territory located in the Caribbean and to the geographical east of Puerto Rico. Most of the islands are a part of the Virgin Islands archipelago while the remaining islands constitute the US Virgin Islands and the Spanish Virgin Islands. British Virgin Islanders are classed as British Overseas Territories citizens and since 2002 have had full British citizenship. While BVI’s territory is not part of the European Union and not directly subject to EU laws, its citizens are considered as citizens of the European Union as well.
Yet, you may still be wondering – what does this mean for businesses set up in the BVI? And why do companies register in the British Virgin Islands? Here are some of the key benefits of setting up a business in this unique region.
1. Corporate Freedom
One of the main aims of corporate law in the British Virgin Islands is to allow for maximum levels of flexibility while maintaining common law legal standards. Under this legal framework, businesses are allowed to adopt any legal practises and there are no additional restrictions or limitations placed on companies in relation to corporate benefit. Furthermore, such structures ensure that the incorporation of offshore companies in the British Virgin Islands is modern, adaptable and commercially minded. This business centric approach aids in boosting productivity levels and legal reliability within its corporate exchanges and day to day operations.
Additionally, when one decides to open company in BVI, another aspect of corporate freedom businesses are granted is that of corporate efficiency. Businesses set up in BVI hold a wide ranging corporate capacity, without any limitations in relation to financial assistance as well. In fact, the process of applying for the authorisation of corporate activities is extremely efficient. For instance, a significant majority of aforementioned business activities can be directly approved by directors without the need for a shareholder’s resolution.
2. Tax Neutrality
Businesses incorporated in the British Virgin Islands are not subjected to any income tax, corporation tax, capital gains tax, wealth tax or any other similar financial obligations. Furthermore, by utilising a BVI company as a key intermediary holding company can ensure that certain layers of a firm’s corporate holding structure is not subject to taxation, thus lowering overall cost for the business. This is in contrast to regular companies in other countries which have to pay taxes in the usual fashion.
3. Minimal Requirements for Businesses
Any individual opting to register a business company in BVI need not be concerned over additional burdens and obligations such as document compliance or corporate necessities, providing these firms the unique opportunity to preserve additional time and cash as there is no need to meet such regulations and criteria. This also means that the business will be successful in maintaining cash flow and overall solvency of their balance sheet, while simultaneously ensuring that the appropriation of assets to investors or redemption of shares is an easy, convenient and direct process. Thus, such BVI company advantages directly empower them to offer financial support to third parties wishing to secure its claims.
Additionally, another aspect of business regulations and requirements minimised by incorporating in the British Virgin Islands is the capitalisation requirements frequently placed on businesses. BVI Companies are not mandated to act in accordance to “thin capitalisation” rules or any external capital maintenance requirements most other corporations would ordinarily be subjected to. So long as the company is able to maintain cash flow and balance sheet solvency, the aforementioned distribution of assets, especially in the form of dividends, and redemption of shares for shareholders will be an even more straightforward process.
4. Low business incorporation and set up costs
One key concern influencing an investor’s decision to proceed on a business venture is teh initial capital required and cost borne. In this regard, BVI companies are considered relatively less expensive in contrast to other premium jurisdictions for offshore companies such as the Cayman Islands and Bermuda, as well as a majority of mid-shore islands/countries such as Hong Kong and Singapore. Specifically, the average BVI company is most commonly incorporated for around US$1,400 inclusive of disbursements, while feed paid annually to the government is worth merely US$450. Thus, such low costs make registering a company in the British Virgin Islands an attractive option especially for investors looking to minimise costs to maximise returns.
5. Efficient Corporate Maintenance
Offshore companies incorporated in the British Virgin Islands are not mandated to hold yearly meetings amongst shareholders and the Board of Directors. Moreover, continual obligations for such BVI companies and their officers and owners are commercially progressive and non-onerous. The convenience of such business obligations is demonstrated in its relatively lax regulations. For example, only a single director and single shareholder are sufficient for the business to incorporate.
Additionally, there are absolutely no requirements for a variety of procedures and restrictions most businesses are normally subjected to. For instance, there are no requirements for a corporate secretary, no residency requirements for directors, no requirements regarding the frequency or location of meetings of directors or shareholders, no requirements for audited financial statements and no required annual filings. This ensures that the usual costs required for a business to run and function properly are much lower within the BVI.
6. High levels of confidentiality
Both the register of directors and the register of shareholders of a BVI company are not available for the public. While safeguards exist to combat the unlawful use of such business confidentiality to engage in money laundering and other forms of international crime, companies adhering to legal boundaries are free to operate with such security and privacy protections.
Furthermore, the BVI does not enforce any taxes on organisations and does not have any tax treaties with other countries. This ensures that your corporate bank accounts financial security and privacy is ensured, thus making it an optimal location for the set up of one’s offshore bank account.
By the end of this article, we hope that you are no longer wondering why do companies register in British Virgin Islands, and instead, have realised the advantages of choosing to open company in BVI. So, with all of these benefits in mind and a newfound understanding about BVI, what else are you waiting for? Contact us to find out more about the process of starting a business in the British Virgin Islands, and our dedicated and experienced team will respond within the next 24 hours.