What You Need To Know About Setting Up Company In BVI

  • Post category:BVI

Offshore businesses registered in the British Virgin Islands are referred to as BVI companies. An International Business Company (IBC) may incorporate under the BVI territory and benefit from tax and bureaucracy advantages under the BVI Business Companies Act, which replaced the International Business Companies Act.

What you need to know about setting up a company in BVI

To take advantage of the tax haven laws of the territory and its low tax requirements, the majority of offshore companies register as BVI companies. Businesses operating outside of BVI are exempt from income tax, corporate tax, and sales tax requirements.

THINGS YOU NEED TO KNOW ABOUT SETTING UP A COMPANY IN BVI

LOW TAXATION REQUIREMENTS (FOR BUSINESSES OPERATING OUTSIDE THE BVI)

Because of the “Territorial Tax System” used by the BVI, IBCs that incorporate there but conduct their business outside of the nation simply pay no corporate taxes. Certain types of income, capital gains, sales, profits, dividends, interests, and royalties are not subject to taxation for these companies.

Only when a business has local operations, like hiring local employees or operating locally within one of the BVI’s many islands, does the government of the BVI collect taxes from IBCs. The majority of foreign-operated IBCs generate revenue for the government through foreign company registration and licensing fees, which are frequently much more than those associated with incorporation in onshore jurisdictions.

The BVI has Tax Information Exchange Agreements (TIEA) rather than Double Tax Agreements (DTAs) with other jurisdictions since withholding tax is not levied there. When other jurisdictions legally require it, the BVI is obligated by a TIEA to disclose tax-related information.

Being a British Overseas Territory, the BVI is not able to sign or ratify corporate tax conventions on its own. As a result, BVI conventions are mostly based on UK conventions, and the UK has the authority to arrange for the BVI to ratify any convention that is expanded there. 

LIMITED BANKING OPTIONS

With just three banks serving the whole territory, the BVI’s banking sector is small. IBCs would need to either have an actual operating business with employees based in the BVI or have an “offshore bank account” for the BVI IBC in another jurisdiction (like Singapore) that is familiar with and has experience with BVI structures in order for them to open bank accounts in the BVI.

The BVI banks now impose strict know-your-customer (KYC) requirements, which often require in-person visits and meetings, in order to open bank accounts for IBCs.

SIMPLE BUSINESS SETUP

The BVI is a popular offshore jurisdiction for company formation because it is relatively simple to set up an IBC and doesn’t require a lot of formalities.

New IBCs in the BVI only need to name a minimum of one director and one shareholder, who can be of any nationality, in contrast to many other financial centers that require directors and shareholders to be residents of that nation. Annual meetings may be held anywhere in the world and are not legally required to take place in the British Virgin Islands.

Up to 50,000 shares may be issued in any currency or for a sum other than cash; shares may be issued with or without par value; shares issued over that amount will incur additional fees. Although it is recommended to keep them, annual return files and account audits are optional.

In the BVI, dissolving a company is simple (though there’s still a chance that creditors could successfully petition to have a struck-off company reinstated). In practice, companies that do not renew their registrations after a certain amount of time may simply be struck off without any further action taken against them unless there are mitigating factors, even though company liquidation is theoretically a complicated process. 

If the company wants to be dissolved without having to pay new annual fees, all documents related to the business and its operations must be kept for several years.

Since annual reporting and tax filing are not currently required, BVI company structures are easy to set up and maintain. They may become more affordable as a result of this. BVI entities are allowed to have corporate bank accounts, which are typically necessary to support operations, foreign financial transactions, and investments as they are a recognized jurisdiction.

One of the main factors contributing to the BVI’s easy setup process is the country’s robust and compliant workforce.

VARIETY IN TRUST STRUCTURES AND CORPORATIONS

The BVI is one of the most diverse financial hubs in the world with respect to the range of corporations and trust structures that can be established there. Any of the following names or suffixes may be used to register newly incorporated IBCs in the BVI:

  • Limited/Ltd
  • Corporation/Corp
  • Incorporated/Inc
  • Societe Anonyme/Sociedad Anonima (S.A.)

The registration of company names in (Mandarin) Chinese is also allowed in the BVI, which makes the BVI a popular offshore option for clients hailing from  China Hong Kong, and Taiwan.

CONFIDENTIALITY

When it comes to maintaining the privacy of business information, the BVI has an excellent reputation. The beneficial owner of a company does not currently need to be disclosed to the public (though this could change in the future); however, the registered agent with whom an IBC registers need to have access to that data. If there are records reflecting the true owner of the business, such as a declaration of trust, nominee directors and nominee shareholders may also be utilized as an additional degree of privacy for the ultimate beneficial owner. The Register of Directors is currently the only document that is accessible to the general public.

In the BVI, registered business agents are only obligated to reveal company ownership in response to a valid request, like a TIEA from another jurisdiction.

In the current environment of Common Reporting Standards (CRS) and Automatic Exchange of Information (AEOI), the BVI also permits IBCs to issue bearer shares through an authorized custodian; however, this option is rarely used. 

Through the potential use of Trust Structures as owners of the underlying IBC company, the BVI also permits confidentiality in this regard.

COST OF INCORPORATION AND ANNUAL RENEWAL

Companies that register in the BVI are not required to file taxes or submit annual reports; however, in order to keep their company’s good standing, they must pay an annual maintenance fee. Additionally, because BVI IBCs do not need a resident director or company secretary, they are extremely cost-effective for clients looking for a company to hold their assets or act as a business entity for trading, investment, and holding purposes.


PROCESS OF STARTING A BUSINESS IN THE BVI

Choose and Reserve the Company’s Trade Name

The first step for the applicant is to select a unique name for the proposed business. The selected name must then be reserved with the BVI Registry. However, the company name will be looked up on the submitted name by the BVI Commercial Registry. The applicant needs to get in touch with the BVI Commercial Registry in order to avoid being denied.

Appoint a Registered Agent for the Company

When incorporating with the BVI Registrar, the applicant is required to choose a registered agent.

Open a Corporate Bank Account for the Company

For the Company to start doing business, it must open a bank account in its name before incorporation.

Before submitting the paperwork to the Authority, the applicant needs to open a corporate account.

Additionally, employers need to register in advance for their social security benefits.

Submit the relevant documents for process completion

The applicant must draft the company’s articles of association, choose a registered agent, and provide information about the company’s founder in addition to opening the bank account. Once these documents are drafted and compiled, the applicant must submit them to the BVI Companies Registry for registration approval.

Apply for required licenses to commence Business Operations

To officially launch its business, the recently incorporated Company must obtain the approval of registration and then officially search for additional relevant licenses. These permits are available from the BVI Financial Services Commission.

DOCUMENTS REQUIRED FOR A BVI OFFSHORE COMPANY REGISTRATION

  • The Charter
  • Certificate of Incorporation
  • Minutes of Meeting (Directors and Shareholders)
  • Register of Directors
  • Register of Members
  • Register of Mortgage

Reach out to us at Relin Consultants for BVI company registration.

FAQs

Does registering a company require my physical presence in the BVI?

No, directors and shareholders do not need to be present in person in the BVI. A registered agent can manage the entire registration procedure.

Who can be a director or shareholder of a BVI offshore company?

Individuals or corporate entities may serve as directors and shareholders, and they may be of any nationality. Shareholders and nominee directors are also permitted to enjoy greater confidentiality.

Is my information kept confidential?

Strict confidentiality laws are a well-known feature of the BVI. The specifics of directors and shareholders are kept private, even though the registered agent keeps a record of some information.