On this Page:

- BRITISH VIRGIN ISLANDS FORMS OF OFFSHORE OPERATION
- BRITISH VIRGIN ISLANDS TAX TREATMENT OF OFFSHORE OPERATIONS
- BRITISH VIRGIN ISLANDS TAXATION OF FOREIGN EMPLOYEES
- BRITISH VIRGIN ISLANDS EXCHANGE CONTROL
- BRITISH VIRGIN ISLANDS EMPLOYMENT AND RESIDENCE

Under the 2004 Business Companies Act, several different types of companies can be incorporated including:

• Companies limited by shares. Likely to remain the most popular form of BVI company.
• Companies limited by guarantee not authorised to issue shares.
• Companies limited by guarantee authorised to issue shares.
• Unlimited companies authorised to issue shares.
• Unlimited companies not authorised to issue shares.

See Forms of Company for a fuller description of the 2004 BVI BC Act.

British Virgin Islands Tax Treatment of Offshore Operations

From 2006, corporate income tax in the BVI has been abolished (see below).

In October 2004 Chief Minister at the time, Orlando Smith informed the country’s Legislative Council that a two-year transition period would be put in place to smooth the changeover to the proposed new Business Companies Act, which has lowered the income tax rate to 0% for both local and International Business Companies.

The new legislation, which took effect on 1st January 2005, was drafted to ensure the territory's full compliance with the European Union (EU) Savings Tax Directive and EU Code of Conduct on Business Taxation, as required by the United Kingdom of all its Overseas Territories.

Under the transition arrangements announced by Dr Smith, new incorporations were still possible under old legislation throughout 2005. From 2006, new incorporations must be made under the new Business Companies Act, although companies already on the register were permitted to operate under the old IBC Act or Companies Act for an additional year. From 1st January 2007, all companies were required to be operating under the new legislation.

The Act requires companies to use a registered agent to ensure compliance with the new laws.

Under the new legislation, the income tax system for employees has also disappeared. However, in its place, a new payroll tax is levied, 8% of which is paid by the employee. The first USD10,000 of income remains tax free.

Local firms are now required to pay annual licence fees.

Insurance companies and mutual funds must pay license fees in addition to registration and incorporation fees:

British Virgin Islands Taxation of Foreign Employees

There are no special rules applying to the foreign or BVI employees of operations. See Domestic Personal Taxes for the general principles of individual taxation in the BVI, which also apply to the resident employees of non-resident entities. There are no special privileges or exemptions for expatriate workers, indeed they pay higher land taxes than BVI residents.

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British Virgin Islands Exchange Control

The British Virgin Islands have no exchange controls.

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British Virgin Islands Employment and Residence

In order to work in the BVI, a work permit is needed, except for 'Belongers', naturalised citizens and holders of a certificate of residency. Work permits are issued only when there is no suitable local applicant for the job.

Under a new labour code introduced in 2002, it was proposed that 'non-belonger' workers in the Islands would no longer be granted an initial work permit of more than five years. Permits would be issued for up to one year at a time and then be considered for a renewal or an extension. A new five-year limit was introduced under which workers who have held work permits for five years must leave the BVI with their dependents and remain outside the territory until they can be considered for either re-employment or new employment. The proposals were resisted by business interests.

The Labour Code 2010, gazetted in May 2010, came into force on 4 October 2010. The Code revises the rules for work permits. Under the Code, work permits are valid for a maximum of three years and may be renewed upon application. Applicants who do not receive a renewal may be entitled to severance pay from the employer.

In order to lease or purchase land, non-Belongers must obtain an Alien Landholding Licence. Applications for a Licence must be accompanied by two personal financial references, one bank reference, two character references, police record, application fee of USD200 (per individual) or USD300 (per company). Once the licence has been granted applicants pay an acceptance fee of USD600 per person and USD1000 per company. Licences carry a 2 or 3 year commitment to develop unimproved land.

In December, 2004, the government outlined the details of a new immigration policy framework in a bid to clarify the rules surrounding applications for residence and ‘belonger’ status. Then Chief Minister Orlando Smith explained that the Board of Immigration would make recommendations in 2005 concerning those who applied for residence status before January 1, 2003 and had lived in the territory continuously for the last twenty years. In June, 2005, 92 of these individuals received residence and belonger certificates.

Approvals for those applying for residency status after January 1, 2003 are limited to no more than 25 persons per year. The government also stressed that in all cases, individuals cannot be away from the BVI for more than 90 days in any calendar year if they want to qualify for residency status.

Smith acknowledged that controlling immigration in the territory represented a “very serious challenge” for the government, and explained that a balance must be struck between welcoming outsiders and protecting the privileges afforded to BVI citizens.

However, the issue of immigration reform has not yet been settled conclusively, and in March 2008 Premier and Minister of Finance Ralph O’Neal announced in his budget speech that comprehensive immigration reform would be a priority that year.

"We will amend existing legislation to implement additional control measures. Current legislation will be reviewed to ensure compliance with international laws, human rights and other conventions. As we embark on the reform process, we will ensure citizen participation by conducting regular consultations with representatives of the community, advocacy groups and other private sector organisations," he revealed. However, three years on the issue of immigration has not been resolved.

Further details of the BVI's immigration and work permit rules can be obtained from the Immigration Department at:

341 Waterfront Drive,
Ashley Ritter Building,
Road Town,
Tortola,
BVI
Tel: 1-284-494-4399

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