| BRITISH VIRGIN ISLANDS |
| KnowYourCountry |
A. TAXES PAYABLE
FEDERAL TAXES AND LEVIES
Company Tax
COMPANY TAX
All companies incorporated in the British Virgin Islands (BVI) or managed and controlled in
the British Virgin Islands are treated as resident and, therefore potentially chargeable to
income tax under the British Virgin Islands Income Tax Act, Chapter 206.
However the BVI Business Companies Act 2004 provides a general exemption from the
requirements of the British Virgin Income Tax Act, Chapter 206 for:
• All BVI business companies
• All dividend, interest, rental, royalties, compensation and other amounts paid by a
company
• All capital gains realised with respect to any shares, debt obligations of a business
company.
In addition, the Business Companies Act provides that no estate, inheritance, succession
or gift tax rate, levy, duty or other charge is payable with respect to any shares, debt
obligations or other securities of a business company. A company is exempt from stamp
duty except where the instrument relates to the transfer of an interest in land in the BVI or
the transfer of securities of a land owning company (the land situated in the BVI).
Also since 1 January 2005, the British Virgin Islands have adopted a zero-rated income tax
regime for all corporate entities.
Companies must, however, pay an initial registration fee and an annual licence fee to the BVI Financial Services Commission. The current
registration fee is US$350 (US$1,100 if the company is authorised to issue more than 50,000 shares) and the annual licence fee is $350 or
US$1,100 if the company is authorised to issue more than 50,000 shares.
The initial registration fee and an annual licence fee for a restricted purpose company is US$5,000.
CAPITAL GAINS TAXES
There is no capital gains tax in the BVI.
BRANCH PROFIT TAX
There is no branch profit tax in the BVI.
SALES TAX/VALUE ADDED TAX
There are no sales taxes or value added taxes in the BVI.
OTHER TAXES
In the BVI, stamp duty is imposed on transfer of real estate and the transfer of shares in a BVI company owning real estate in the BVI. The rate
of stamp duty is 4% for belongers and 12% for non-belongers. The stamp duty on other instruments and transfers range from 0.2% to 5%
Import duties are levied on goods imported into the BVI at rates up to 20%.
The following table summarises other fees payable:
Annual licence fees by BVI Business Companies with authorised share capital of:
Up to US$50,000 or foreign currency equivalent or authorised
to issue up to 50,000 shares US$350
Exceeding US$50,000 or foreign currency equivalent or authorised
to issue more than 50,000 shares US$1,100
General banking licence US$50,000
Restricted Class I banking licence US$32,000
Restricted Class II banking licence US$32,000
Insurance company licence up to US$10,000
Class I trust licence US$16,000
Class II trust licence US$14,000
Class III trust licence US$12,000
Restricted trust licence US$500
B. DETERMINATION OF TAXABLE INCOME
There are no taxes on income or capital gains. There are no death duties, inheritance taxes or gift taxes.
C. FOREIGN TAX RELIEF
This is not applicable as there are no double tax arrangements because there is no taxation on income in the BVI.
D CORPORATE GROUPS
There is no group tax relief legislation as there are no taxes on income or capital gains.
E RELATED PARTY TRANSACTION
There is no transfer pricing or related party legislation in the BVI.
F WITHHOLDING TAX
There is no withholding tax on interest, dividends or royalties paid by BVI business companies. However, the BVI (like other dependent
territories) has applied the European Union (EU) Savings Directive since 1 July 2005. A withholding tax (initially 15%, rising to 20% from 1 July
2008) has been applied to interest payments to natural persons resident within the EU. The withholding tax is not compulsory in that a
depositor can avoid paying the tax by instead providing full information about their account to the authorities within their country of residence.
G EXCHANGE CONTROL
The US dollar is legal tender in the BVI. There is no exchange control or restriction on the movement of US dollar funds into or out of the BVI or
on their conversion to other currencies.
H PERSONAL TAX
Since 1 January 2005, income tax has been zero-rated following the introduction of the BVI Payroll Taxes Act 2004.
Payroll tax
Every employer who carries on business in the BVI is liable to pay payroll tax in respect of:
(i) Remuneration paid by them to every employee
(ii) Deemed remuneration paid by them to every deemed employee for services rendered by the employee or deemed employee wholly or
mainly in the BVI whether or not the remuneration is paid in the BVI.
A self-employed person is also liable to payroll tax on their deemed remuneration. A partner in a partnership carrying on business in the BVI is
a deemed employee of that partnership if he renders services to the partnership and participates, otherwise than as employee, in the income of
the partnership. Likewise, a shareholder in a company carrying on business in the BVI is a deemed employee of that company if he renders
services to the company and participates, otherwise than as employee, in the income of the company.
Remuneration is defined to include wages, salaries, money paid through a profit-sharing scheme, bonuses, gratuities, severance pay,
residential rent and other benefits-in-kind.
The rate of payroll tax depends on whether the employer is a Class 1 Employer or a Class 2 Employer. Class 1 employees are smaller entities
which does not exceed the following thresholds in the relevant financial year.
Employer category Class 1 Class 2
Payroll US$150,000 or less More than US$150,000
Annual turnover US$300,000 or less More than US$300,000
Number of employees
(including part-time and deemed) 1 to 7 8 and more
Total percentage applied to
remuneration liable to payroll tax 10% 14%
Percentage applied to remuneration
due by employer 2% 6%
Percentage applied to remuneration
due by employee 8% 8%
The first US$10,000 of actual remuneration paid to an employee, deemed employee or self-employed person is tax-exempt.
I TREATY AND NON-TREATY WITHHOLDING TAXES
The United Kingdom’s double tax treaties (DTAs) with Japan and Switzerland have been extended to the BVI, although these treaties are not
used in practice. The priority of the BVI has been to enter into Tax Information Exchange Agreements or TIEAs rather than DTAs. The BVI has
entered into TIEAs with the following jurisdictions: Aruba, Australia, China, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany,
Greenland, Iceland, India, Ireland, Netherlands, New Zealand, Norway, Portugal, Sweden, United Kingdom, and the United States.
_________________________________________________________________________________________________________________
FEDERAL TAXES AND LEVIES
Company Tax
COMPANY TAX
All companies incorporated in the British Virgin Islands (BVI) or managed and controlled in
the British Virgin Islands are treated as resident and, therefore potentially chargeable to
income tax under the British Virgin Islands Income Tax Act, Chapter 206.
However the BVI Business Companies Act 2004 provides a general exemption from the
requirements of the British Virgin Income Tax Act, Chapter 206 for:
• All BVI business companies
• All dividend, interest, rental, royalties, compensation and other amounts paid by a
company
• All capital gains realised with respect to any shares, debt obligations of a business
company.
In addition, the Business Companies Act provides that no estate, inheritance, succession
or gift tax rate, levy, duty or other charge is payable with respect to any shares, debt
obligations or other securities of a business company. A company is exempt from stamp
duty except where the instrument relates to the transfer of an interest in land in the BVI or
the transfer of securities of a land owning company (the land situated in the BVI).
Also since 1 January 2005, the British Virgin Islands have adopted a zero-rated income tax
regime for all corporate entities.
Companies must, however, pay an initial registration fee and an annual licence fee to the BVI Financial Services Commission. The current
registration fee is US$350 (US$1,100 if the company is authorised to issue more than 50,000 shares) and the annual licence fee is $350 or
US$1,100 if the company is authorised to issue more than 50,000 shares.
The initial registration fee and an annual licence fee for a restricted purpose company is US$5,000.
CAPITAL GAINS TAXES
There is no capital gains tax in the BVI.
BRANCH PROFIT TAX
There is no branch profit tax in the BVI.
SALES TAX/VALUE ADDED TAX
There are no sales taxes or value added taxes in the BVI.
OTHER TAXES
In the BVI, stamp duty is imposed on transfer of real estate and the transfer of shares in a BVI company owning real estate in the BVI. The rate
of stamp duty is 4% for belongers and 12% for non-belongers. The stamp duty on other instruments and transfers range from 0.2% to 5%
Import duties are levied on goods imported into the BVI at rates up to 20%.
The following table summarises other fees payable:
Annual licence fees by BVI Business Companies with authorised share capital of:
Up to US$50,000 or foreign currency equivalent or authorised
to issue up to 50,000 shares US$350
Exceeding US$50,000 or foreign currency equivalent or authorised
to issue more than 50,000 shares US$1,100
General banking licence US$50,000
Restricted Class I banking licence US$32,000
Restricted Class II banking licence US$32,000
Insurance company licence up to US$10,000
Class I trust licence US$16,000
Class II trust licence US$14,000
Class III trust licence US$12,000
Restricted trust licence US$500
B. DETERMINATION OF TAXABLE INCOME
There are no taxes on income or capital gains. There are no death duties, inheritance taxes or gift taxes.
C. FOREIGN TAX RELIEF
This is not applicable as there are no double tax arrangements because there is no taxation on income in the BVI.
D CORPORATE GROUPS
There is no group tax relief legislation as there are no taxes on income or capital gains.
E RELATED PARTY TRANSACTION
There is no transfer pricing or related party legislation in the BVI.
F WITHHOLDING TAX
There is no withholding tax on interest, dividends or royalties paid by BVI business companies. However, the BVI (like other dependent
territories) has applied the European Union (EU) Savings Directive since 1 July 2005. A withholding tax (initially 15%, rising to 20% from 1 July
2008) has been applied to interest payments to natural persons resident within the EU. The withholding tax is not compulsory in that a
depositor can avoid paying the tax by instead providing full information about their account to the authorities within their country of residence.
G EXCHANGE CONTROL
The US dollar is legal tender in the BVI. There is no exchange control or restriction on the movement of US dollar funds into or out of the BVI or
on their conversion to other currencies.
H PERSONAL TAX
Since 1 January 2005, income tax has been zero-rated following the introduction of the BVI Payroll Taxes Act 2004.
Payroll tax
Every employer who carries on business in the BVI is liable to pay payroll tax in respect of:
(i) Remuneration paid by them to every employee
(ii) Deemed remuneration paid by them to every deemed employee for services rendered by the employee or deemed employee wholly or
mainly in the BVI whether or not the remuneration is paid in the BVI.
A self-employed person is also liable to payroll tax on their deemed remuneration. A partner in a partnership carrying on business in the BVI is
a deemed employee of that partnership if he renders services to the partnership and participates, otherwise than as employee, in the income of
the partnership. Likewise, a shareholder in a company carrying on business in the BVI is a deemed employee of that company if he renders
services to the company and participates, otherwise than as employee, in the income of the company.
Remuneration is defined to include wages, salaries, money paid through a profit-sharing scheme, bonuses, gratuities, severance pay,
residential rent and other benefits-in-kind.
The rate of payroll tax depends on whether the employer is a Class 1 Employer or a Class 2 Employer. Class 1 employees are smaller entities
which does not exceed the following thresholds in the relevant financial year.
Employer category Class 1 Class 2
Payroll US$150,000 or less More than US$150,000
Annual turnover US$300,000 or less More than US$300,000
Number of employees
(including part-time and deemed) 1 to 7 8 and more
Total percentage applied to
remuneration liable to payroll tax 10% 14%
Percentage applied to remuneration
due by employer 2% 6%
Percentage applied to remuneration
due by employee 8% 8%
The first US$10,000 of actual remuneration paid to an employee, deemed employee or self-employed person is tax-exempt.
I TREATY AND NON-TREATY WITHHOLDING TAXES
The United Kingdom’s double tax treaties (DTAs) with Japan and Switzerland have been extended to the BVI, although these treaties are not
used in practice. The priority of the BVI has been to enter into Tax Information Exchange Agreements or TIEAs rather than DTAs. The BVI has
entered into TIEAs with the following jurisdictions: Aruba, Australia, China, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany,
Greenland, Iceland, India, Ireland, Netherlands, New Zealand, Norway, Portugal, Sweden, United Kingdom, and the United States.
_________________________________________________________________________________________________________________
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Since 1994, the PKF network of independent member firms, which is administered by
PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG). The
report below is extracted from the 2010 WWTG and reproduced with the kind permission of
PKF International Limited. Before continuing, please read the Important Disclaimer below.
________________________________________________________________________
IMPORTANT DISCLAIMER:
This report should not be regarded as offering a complete explanation of the taxation matters that are
contained within this report.
This report has been made available on the express terms and understanding that the publishers and the
authors are not responsible for the results of any actions which are undertaken on the basis of the
information which is contained within this report, nor for any error in, or omission from, this report.
The publishers and the authors expressly disclaim all and any liability and responsibility to any person,
entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of
the contents of this report.
Accordingly no person, entity or corporation should act or rely upon any matter or information as contained
or implied within this report without first obtaining advice from an appropriately qualified professional
person or firm of advisors, and ensuring that such advice specifically relates to their particular
circumstances.
PKF International is a network of legally independent member firms administered by PKF International
Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or
liability for the actions or inactions on the part of any individual member firm or firms.
________________________________________________________________________
PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG). The
report below is extracted from the 2010 WWTG and reproduced with the kind permission of
PKF International Limited. Before continuing, please read the Important Disclaimer below.
________________________________________________________________________
IMPORTANT DISCLAIMER:
This report should not be regarded as offering a complete explanation of the taxation matters that are
contained within this report.
This report has been made available on the express terms and understanding that the publishers and the
authors are not responsible for the results of any actions which are undertaken on the basis of the
information which is contained within this report, nor for any error in, or omission from, this report.
The publishers and the authors expressly disclaim all and any liability and responsibility to any person,
entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of
the contents of this report.
Accordingly no person, entity or corporation should act or rely upon any matter or information as contained
or implied within this report without first obtaining advice from an appropriately qualified professional
person or firm of advisors, and ensuring that such advice specifically relates to their particular
circumstances.
PKF International is a network of legally independent member firms administered by PKF International
Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or
liability for the actions or inactions on the part of any individual member firm or firms.
________________________________________________________________________
|
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20 September 2011 - Peer review report
focusing on legal frameworks which allow for
transparency and exchange of tax information
now available.
Key Findings:
The Virgin Islands has made progress in
improving its legal and regulatory framework in
order to be able to effectively exchange tax
information. The availability of information on
trusts and the availability of reliable accounting
records is not yet ensured however. Also, the
authorities do not have sufficient powers to
obtain all foreseeably relevant information in
order to respond to international requests. The
Virgin Islands has not been assessed as ready
to move to the next phase of its evaluation. The
Virgin Islands’ position will be reviewed in six
months.
To view report click here
______________________________________
focusing on legal frameworks which allow for
transparency and exchange of tax information
now available.
Key Findings:
The Virgin Islands has made progress in
improving its legal and regulatory framework in
order to be able to effectively exchange tax
information. The availability of information on
trusts and the availability of reliable accounting
records is not yet ensured however. Also, the
authorities do not have sufficient powers to
obtain all foreseeably relevant information in
order to respond to international requests. The
Virgin Islands has not been assessed as ready
to move to the next phase of its evaluation. The
Virgin Islands’ position will be reviewed in six
months.
To view report click here
______________________________________
| Last Updated: 6 April 2012 |