The British Virgin Islands are rightfully regarded as the gold standard for registering and conducting business in tax-free territories. This small island nation, a dependent territory of the United Kingdom, has established an efficient system of relationships with other countries and optimized its laws in such a way that there are virtually no viable alternatives to the BVI in practice.
The British Virgin Islands are an excellent location to open offshore company as they have managed to remain outside the risk zone of sanctions and legal/political pressure, while retaining the attractiveness of conducting business in a tax-free environment. As a result, you can enjoy all the fiscal advantages that come with it without worrying about business complications, bank account freezes, or heightened scrutiny from tax authorities.
The British Virgin Islands, in terms of business security and level of protection, can be considered as a midshore jurisdiction within the offshore realm. Directly comparing the BVI to places like Singapore or Hong Kong would be inappropriate since these countries offer fundamentally different business conditions. However, such a comparison is indeed tempting, especially if you conduct an honest and transparent business.
Tax accounting in the offshore jurisdiction of the British Virgin Islands is highly simplified, to the extent that it is practically non-existent. The main taxes, such as personal income tax, corporate tax, value-added tax (VAT), and withholding tax on foreign currency transactions, are not levied here. Financial reporting is streamlined with no auditing requirements, property taxes are extremely low, and there are active Double Taxation Agreements (DTAs) in place. In short, the British Virgin Islands offshore jurisdiction is a truly exceptional case in the modern world of pervasive control and the absence of the concept of anonymity in real business operations.
Jurisdiction features
The British Virgin Islands (BVI) has established highly favorable conditions for conducting business. There are numerous reasons to make such a claim, but we will focus only on the most significant and important ones.
Political structure:
- Favorable geographic location – situated in the eastern Caribbean archipelago, near Puerto Rico and the mainland United States.
- Status as a self-governing overseas territory within the United Kingdom.
- Formal head of the BVI is the King of the United Kingdom, represented by the Governor of the BVI.
- Head of government is the Premier, appointed by the Governor.
- Legislative body is the House of Assembly, consisting of 13 elected members and one non-voting member.
- The highest judicial authority in the BVI offshore jurisdiction is the Eastern Caribbean Supreme Court.
Economy, infrastructure:
- More than 60% of the economy is comprised of financial services, with the tourism sector also being of paramount importance.
- The British Virgin Islands offshore jurisdiction is home to nearly 500,000 companies. The registration fees for these companies contribute to half of all budget revenues.
- In terms of offshore investment funds, the BVI is second only to the Cayman Islands.
- The level of foreign direct investment is no less than $125 billion USD.
Population, language, and culture:
- The official language is English.
- The population is small, with only 37,000 people, and 41% of all citizens reside in urban areas.
- The majority of the BVI citizens have Afro-Caribbean origins (82%), while individuals of purely European descent make up a significantly smaller portion at 6.8%.
- Events such as the Spring Regatta, music and Easter festivals, Christmas celebration on Main Street, and the BVI-US Friendship Day are held on the islands.
- All citizens of the British Virgin Islands offshore jurisdiction are automatically considered citizens of the United Kingdom and have the right to live and work in England and the EU.
- The literacy rate is 98.2%.
Business and commercial activity:
- The British Virgin Islands is an offshore jurisdiction where there is no currency control.
- The lawful means of payment is the US dollar.
- Currency conversion is free and unrestricted.
- The corporate registry is responsible for the registration of companies in the British Virgin Islands.
- The functions of a regulator are carried out by the Financial Services Commission.
- The legislation is based on English common law.
- The laws promote business attraction and investments.
- The British Virgin Islands Companies Act is often replicated by other offshore jurisdictions.
The advantages of conducting business in the British Virgin Islands
The advantages of conducting business in the British Virgin Islands can be discussed at length. The jurisdiction does not have any significant drawbacks to speak of. In fact, the factors that are sometimes presented as disadvantages (transparency, absence of complete anonymity, etc.) are actually obvious advantages of the British Virgin Islands offshore.
The most significant arguments in favor include:
- Absence of major taxes.
- Strong presence of international business.
- Excellent reputation of companies operating in the British Virgin Islands.
- Effective Tax Information Exchange Agreements (TIEAs) with 17 leading countries (including the United Kingdom, Germany, Italy, Spain, and others).
- Strong connections with the United States and the United Kingdom.
- Legality of using USD in business and daily life.
- High GDP per capita.
- Stable political system.
- Application of English common law.
- Flexible corporate legislation – the British Virgin Islands stimulates and supports businesses without limiting them, making it favorable for companies/individuals seeking legal tax optimization.
- The legislation of the British Virgin Islands is maximally optimized to simplify the registration of offshore companies, facilitate their commercial activities, and attract foreign investors.
- The BVI is a full member of many international organizations, including the International Organization of Securities Commissions (IOSCO), the Caribbean Financial Action Task Force (CFATF), and the Organisation for Economic Co-operation and Development (OECD).
- It boasts an open economy with minimal prohibitions and restrictions.
- There is no specific tax reporting or accounting requirements in the British Virgin Islands offshore zone.
- The British Virgin Islands offshore is listed in the white lists of all three organizations (IOSCO, CFATF, OECD) that have assumed regulatory functions in international business matters.
- At least one-third of the country’s GDP is generated through offshore business, financial services, and asset protection/diversification tools.
- 40% of all offshore companies worldwide are domiciled in this jurisdiction.
