12th Oct 2020
Nestled in the heart of the Caribbean, the British Virgin Islands attracts countless visitors with its sandy white beaches and glorious weather, but unlike other holiday destinations, it offers more than beauty to those who want to protect their money and assets. Comprised of 16 habited and more than 20 uninhabited islands, BVI is a self-governing overseas territory of the United Kingdom. It boasts with the steady parliamentary democracy, and its relationship with the UK ensures protection and stability, important to anyone considering benefiting from the territory’s ample financial advantages.
With a population of around 35,000, the island conveniently uses the USD as currency, and in 1994 it inscribed confidentiality for registered business ownership into law, hence many businesses take full advantage of their offshore registration program.
There are over 500,000 companies currently registered as offshore entities in BVI, making the British Virgin Islands one of the most popular tax havens in the world.
|Annual tax rate||0% on a firm’s capital|
|The local equivalent to limited liability company||BVI Business Company (BC)|
|Company Suffix||Ltd.; Corp.; Inc.; S.A. (freedom of choice)|
|Starting costs||€1995.- | no paid-up capital required|
|Income tax on foreign establishments (operating outside the country)||0%|
|Corporate tax on foreign establishments (operating outside the country)||0%|
|Capital gains tax on foreign establishments (operating outside the country)||0%|
|Founders & Shareholders need to be residents||No|
|Identity submission to public records||No|
|Legal System||Common Law|
What else is there that makes BVI a great place to register your business? Here’s an outline of how a BVI-registered organization can save you money.
The BVI has no capital gains tax, no gift tax, no sales tax or value-added tax, no corporation tax, and no inheritance tax. There is income tax, but that is currently also set at zero and has been for many years with no sign of change. In fact, much of the country’s income comes from new business registration fees, so it is not in the interest of the government to change the situation.
Salaries are taxed, however, through a payroll tax, 8% for the employee and 12% or 14% for the employer for any salaries above $12,000.
With very few restrictions, most people can register a BVI Business Company (BC) in the country. It is available regardless of your location in the world, and it can be formed as a continuation of another company at request, creating a wholly owned yet confidential, tax-efficient subsidiary.
Businesses can be incorporated under a variety of suffixes to suit, including:
In all cases, they need just one director, who does not have to reside, or even visit BVI in person.
The system of judiciary is based on that in the UK, in addition, BVI is a member of the Eastern Caribbean Supreme Court.
The BVI BC can be incorporated by anyone, anywhere in the world. The legislation is simple, with each company requiring a single director, who does not need to reside in the country, and annual reporting is not required under law, making the maintenance very simple too. With an offshore entity so easy to create, startups can compete with big players.
With no corporation tax, there are only two costs to concern yourself with: the first is the $450 a year official fee to maintain the status (for businesses with less than 50,000 shares), and the other is a payroll tax. The payroll tax applies to all employee wages, and it is paid at the rate of 8% by the employee, and either 12% or 14% by the business, depending on the annual income.
While incorporating is easy in BVI, there is a downside. Banking opportunities are limited, with just three BVI based banks, all of which require a face-to-face meeting to open the account. This could be an issue, yet several banks in Singapore cover BVI and offer a more digital-friendly solution that works for owners in other countries.
With a simple setup, low maintenance requirements, high levels of confidentiality, minimal taxation and low annual cost, BVI tax haven is the perfect offshore option to keep your assets out of the reach of others. From yachts, planes or anything of value, ownership through a BVI BC offers high levels of protection while minimizing costs.
If you want to find out more about BVI and how remote incorporation can help your business save on taxes, contact the team at Clevver Company here.
Clevver now incorporates in BVI, check it out!
Please note: We at Clevver want to inform SME/start-up owners and founders about tax policies around the world and democratize the access to tax literacy. Clevver does not encourage or support tax evasion. The options stated in this article are not meant as a piece of legal advice; If you are interested in using one of the options, please consult a specialized company lawyer. Clevver lawyers can also assist you with legal inquiries.