BVI Accounting and Tax Obligations
It is important for our international clients to be clear of the BVI accounting and tax obligations. Our accounting team will ensure your company is compliant with local requirements and international tax regulations for companies after completing BVI company registration.
It is important to meet the deadlines stipulated in accordance with the British Virgin Islands corporate law. With our team, you can be assured that all stipulated deadlines will be met while maintaining the highest quality of accounting and tax filings for your firm.
Annual Reporting Requirements
- When it comes to annual reporting requirements, the BVI International Tax Authority does not impose much strict requirements. Companies are not required to prepare financial statement or company accounts unless they are formed on the basis as a local corporation. Nonetheless, the company should still maintain those accounts or records in their local registered office.
- While financial reporting is not necessary, the newly enacted economic substance rule would require companies to submit information on their relevant business activities to their registered agents on an annual basis. Tetra Consultants will continue to advise and clarify any doubts that you may have with regards to your annual reporting obligations.
BVI Tax Obligations
In general, there are no significant tax compliance obligations that your British Virgin Islands entity will have to meet. Dispensing off corporate income, withholding, real property, VAT taxes, companies essentially have to only pay an annual fee.
Taxation Scenario in the BVI
- The British Virgin Islands (BVI) is regarded as one of the world’s top tax havens, providing numerous tax benefits to non-residents or foreigners who wish to invest in the offshore sector.
- In technical terms, an offshore jurisdiction is referred to as a tax haven because it actively promotes the avoidance of all types of taxes. This principle enables business investors to pay the least amount of tax possible for the newly formed company. In general, offshore companies registered in the British Virgin Islands are tax-free. IBCs in the region are even exempt from paying profits and capital gains taxes.
- The British Virgin Islands (BVI) Companies Act 2004 (“Exemption from tax”) governs offshore companies incorporated in the British Virgin Islands (BVI). As a result, it asserts that a company’s dividends, interests, rents, royalties, compensation, and other amounts paid by the company, as well as capital gains realized on any of the company’s shares, debt obligations, or other securities, are completely exempt from all of the income tax ordinance’s provisions.
- The “British Virgin Islands tax haven” was created by enacting a set of very simple corporate tax rules that provide a highly advantageous taxation system. Because the British Virgin Islands does not levy corporate tax and does not tax capital gains or investment income, it is effectively a tax-free jurisdiction. BVI taxes are statutorily exempt for all Business Companies (BCs). Such businesses must, however, pay an annual license fee.
- Dividend, interest, and royalty payments to non-residents are not subject to withholding tax.
- Direct personal taxes are not levied in the British Virgin Islands. Personal income is exempt from taxation, as are capital gains, net worth, and inheritances.
- Business companies in the British Virgin Islands are tax-free, regardless of their source of income. The only tax that exists in the BVI is a payroll tax for businesses that employ local workers; the current rate is 8%, and the first $10,000 is tax-free.
- Both the employer and the employee are required to contribute to the mandatory National Insurance Scheme under the social tax. The total contribution rate is 8.5 percent, with the employer paying 4.5 percent and the remaining 4% is passed on to the employees. The amount of these contributions is determined by the amount of weekly wages.
- Stamp duty is levied at a rate of 12% on real estate transactions for non-BVI citizens. The rates are lower for the citizens of the BVI which is 4%.
- Except for Japan and Switzerland, the British Virgin Islands have no double taxation agreements with any other countries. This is an essential characteristic because it means that no information about the income, profits, or other transactions of any BVI BC, directors, shareholders, or beneficial owners must be disclosed or shared. This is partly because the BVI has maintained a high standard of living and has never needed to enter into such agreements to obtain aid or access to goods and services from other countries.
Contact us now to find out more about BVI annual filing requirements. Our team of experts will revert within the next 24 hours.