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British Virgin Islands Economic Substance

Updated: Dec 31, 2023

British Virgin Islands Economic Substance

Here's an overview of the British Virgin Islands' Economic Substance regime:

What is it?

The Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act), as amended, introduced economic substance requirements for certain BVI companies and limited partnerships engaged in relevant activities.

The goal?

The Act aims to combat tax avoidance by ensuring that companies conducting relevant activities in the BVI have a genuine economic presence in the territory. This means having qualified employees, adequate premises, and incurring sufficient expenditure in the BVI to carry on the core income-generating activities (CIGA) of the business.

Which activities are relevant?

Nine activities are considered relevant under the Act:

  • Banking business

  • Insurance business

  • Shipping business

  • Fund management business

  • Finance and leasing business

  • Headquarters business

  • Holding business

  • Intellectual property business (IP business)

  • Distribution and service centre business

What are the compliance requirements?

Companies engaged in relevant activities must:

  • File an annual economic substance report with the International Tax Authority (ITA)

  • Demonstrate that they have adequate employees, premises, and expenditure in the BVI to carry on their CIGA

  • Maintain proper accounting records and documentation

Penalties for non-compliance

Companies that fail to comply with the economic substance requirements may face significant penalties, including:

  • Fines of up to US$1 million

  • Strike-off from the BVI register

  • Public disclosure of non-compliance

Key takeaways:

  • The BVI Economic Substance regime is designed to ensure that companies have a real economic presence in the territory.

  • Companies engaged in relevant activities must comply with the Act's requirements, including filing annual reports and demonstrating economic substance.

  • Non-compliance can lead to significant penalties.

How Bestar can Help

Bestar deals with offshore company formations in various jurisdictions, including the BVI. We assist with:

  • Incorporation: Handling the paperwork and legal formalities of registering your company in the BVI.

  • Registered Agent: Acting as your official BVI representative to receive legal documents and communications.

  • Bank account opening: Facilitating the opening of a corporate bank account in the BVI.

  • Compliance: Providing guidance on complying with BVI regulations and economic substance requirements.

Contact Bestar directly. Reach out to us directly to inquire about our BVI company setup services.

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