The
BVI, like other British 'dependent territories',
was forced to apply the EU's Savings Tax Directive
from 1st July, 2005, and chose to apply a withholding
tax (initially of 15%, rising to 20% from 1st
July, 2008, and to 35% in 2011) to the returns
on savings paid to nationals of EU Member States.
The Directive does not apply to corporate entities.
British Virgin Islands Residence
and Liability for Taxation
For tax purposes, residence is defined as presence
in the country for more than six months of a
year. Individuals in the BVI pay income tax,
land and housing taxes; there is no capital
gains tax, wealth tax, inheritance or gift taxes,
sales tax or VAT. Stamp duty is payable on some
transactions.
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British Virgin Islands Income
tax
Income tax was abolished in 2006.
In
2004, the government announced that income tax
for both companies and individuals would be
abolished with effect from 2005, with the introduction
of a payroll tax.
In
January, 2005, the Legislative Council approved
the new payroll tax.
The
new payroll tax is levied at a rate of 14%,
8% of which is paid by the employer and the
remainder by the employee, although the first
USD10,000 of income is tax free. The contribution
for small business, defined as those employing
less than seven people and with a payroll of
less than USD150,000 per year, is 10%.
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British
Virgin Islands Real Estate Taxes
Virgin Islanders pay USD10 per year on the first
acre of land or part-acre, and USD3 on each
additional acre. Expatriates pay USD50 per year
for any land less than half an acre, USD150
per year for any land above half an acre, and
USD50 on each additional acre.
House
tax is charged annually on all privately-owned
buildings at the rate of 1.5% of assessed value.
There
is a 12% stamp duty on real estate transactions.
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British Virgin Islands Custom
Duties
Customs
Duties are imposed on most imports, at rates
between 5% and 20%. Materials imported for hotel
construction, and capital goods imported for
enterprises which are deemed to be of special
value to the BVI are exempt from import duties.
If the BVI joins a wider Caribbean single-market
zone, which now seems likely, the loss of tariff
revenues will force the government into wholesale
tax reform, with a sales tax seeming inevitable.
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