The Business Companies Act of the BVI 

BVI financial record-keeping system

According to the Business Companies Act, a corporation is required to keep financial records and underlying papers that can demonstrate the firm’s transactions. These documents may include but are not limited to, agreements, invoices, bank statements, and other documents of a similar nature. These records have to be stored away for at least five years if they are to be considered valid. Any location is acceptable for the storage of the documents; however, if the records are not held at the registered office, the company is required to inform the Registered Agent of the address where the records are being kept.

Annual Government/Renewal Fees of the BVI 

The number of shares that have been issued is used to calculate the number of annual license fees or franchise fees that must be paid. For a business that has a maximum share of 50,000, the annual fees that must be paid beginning in the second year and continuing on into subsequent years will be $450 each. The fees might reach a maximum of $1,200 if the registered capital of the firm is greater than 50,000 shares. A Registered Agent is obligated to make an annual payment to the Registrar in the amount that is specified.

BVI data privacy law

The introduction of the Data Protection Act, of 2021 (often known as the DPA) in the British Virgin Islands (BVI)  safeguards personal data that is handled by public and private organizations. The data protection regimes are comparable to the principles that are applicable in the United Kingdom and the European Union under the General Data Protection Regulation (GDPR). The major purpose of the DPA is to ensure the security of data and to encourage transparency and accountability in the processing of personal data. The DPA is applicable to all existing limited partnerships and incorporations in the BVI (collectively referred to as “Private Body”). A person who processes data in the form of commercial transactions, either directly or on behalf of a private business, is likewise subject to this regulation. This includes data processed on behalf of the body formed in the British Virgin Islands (BVI) or elsewhere outside of the British Virgin Islands (BVI).

BVI taxation law

Due to the fact that the vast majority of taxes are not required to be paid in BVI, the tax system in this jurisdiction is far easier to navigate than the definitive form of taxation used in other jurisdictions. The British Virgin Islands (BVI) do not have a tax on corporations, capital gains, value-added, sales, gifts, or inheritances. A payroll BVI tax on employees working within the territory, stamp duty (which only applies to the transfer of land and the transfer of shares in companies that own land), import duty, land tax, and a number of other minor ancillary taxes and permit fees are some of the other taxes that are imposed in the jurisdiction. The absence of taxes has made the British Virgin Islands (BVI)  a well-known tax haven for overseas investors.

Regarding offshore jurisdiction, for tax purposes, the company must comply with international obligations or global standards. Lately, there have been agreements between BVI and other countries like UK  and US in order to implement regulations to improve international tax compliance. The Tax Authority Act, BVI Limited Partnership Act 2018 has established International Tax Authority that supervises BVI’s compliance with international obligations in cross-border transactions. Apart from the above, BVI has imposed EU Union withholding tax on interest payments in the jurisdiction of persons residing within the European Union.   

Conclusion 

British Virgin Island (BVI) is one of the ideal places to initiate business with its flexible organizational structure, significant tax benefit, and hassle-free company establishment. Apart from that, a person can operate and carry out their business anywhere in the world with minimal financial reporting. However, there are some challenges with regard to a work permit, trade license, and audit requirements. Even if there is no legal need for a legal audit, companies might require an audited statement to prove the company’s lawful establishment in BVI. Apart from that, the Labor Code passed in 2010 requires a work permit which can take more than two months. Additionally, a trade license required to perform business in BVI may take around six weeks for approval, wherein a corporation must register with the Social Security Office and the Inland Revenue Department before starting operations.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

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Incorporation of BVI Companies

BVI company registration

The BVI Business Companies Act also referred to simply as “the Act,” is the statute that is used to incorporate businesses in the British Virgin Islands, both offshore and locally. The Registrar of Corporate Affairs must receive a copy of the company’s Memorandum and Articles of Association from the company’s registered agent. “An application for the incorporation of a company may only be filed by the proposed registered agent, and the Registrar shall not accept an application for the incorporation of a company filed by any other person,” it states in the document. “An application for the incorporation of a company may not be filed by any other person.”

BVI company incorporation

Incorporation of the company is effective from the date the Memorandum and Article of Association are filed with the Registrar. If the incorporation conditions comply with the Act, the Registrar issues a certificate of incorporation and allows a unique number to the company. There is no requirement under the Act to issue shares at the time of incorporation, and neither the company is required to have a director at the time of incorporation. However, the appointment of a director is mandatory under the Act. The Registered Agent is required to appoint the company’s first director, and such a  director has the authority to issue shares to the shareholders. 

“Subject to this Act and to the memorandum and articles, shares in a company may be issued, and options to acquire shares in a company granted, at such times, to such persons, for such consideration and on such terms as the directors may determine.” 

In addition, there is no such criterion for approved share capital, which means that there is no requirement for a minimum amount of share capital. In accordance with the Act, a share may be issued either with or without a par value attached to it. When a corporation issues a share that has a par value, the consideration for such a share might come in any form; nonetheless, it should be at least equal to the par value of the share.

The regulatory framework of BVI

BVI’s legal system for business establishment stems from Delaware General Corporation Law, and as such, the Act follows principles and concepts similar to English Law. A company under the Act may incorporate as a company limited by shares; a company limited by guarantee that is not authorized to issue shares; a company limited by guarantee that is authorized to issue shares; an unlimited company that is not authorized to issue shares or an unlimited company that is authorized to issue shares. In addition, the Act allows “restricted purpose company” for incorporation in BVI, subject to some additional disclosure (a statement that the company is a limited purpose company and its purpose) that has to be made in the Memorandum of Association. Additionally, the BVI Business Companies (Amendment) Act, 2018 has extended the classes of companies that may be Segregated Portfolio Companies (SPC).  

BVI Limited Partnership Act 2018 

The Limited Partnership Act of 2018 is complied with by any limited partnership business that is recognized in the British Virgin Islands. In accordance with the provisions of the Limited Partnership Act of the BVI, a limited partnership can start out either with or without a separate legal identity from its participants, depending on the preferences of the founding general partner. A general partnership is also recognized in the British Virgin Islands, and its operation is governed by the Partnership Act of 1996. In this configuration, a partnership does not have a distinct legal personality from its constituent members, and all partners have complete culpability for the debts incurred by the partnership.

BVI economic substance act

A corporation is required to comply with the BVI Economic Substance Act and perennially submit or report relevant information pertaining to the operation of the business. For the purposes of taxation, the entity must disclose a degree of economic substance within the British Virgin Islands if it conducts activity that falls within the definition of “Relevant Activities.” If the corporation has its tax residence outside of the British Virgin Islands (BVI) or any of the “Listed Jurisdictions,” then the duty to demonstrate that it possesses substance will not apply to the company.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.