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There’s a reason that about 40% of the world’s offshore companies are BVI Company Registrations. It isn’t because the British Virgin Islands are a nice place to visit. With a wide variety of business uses and great benefits, a BVI offshore company can be a smart business move for your company. This article will explore what a BVI company is, the benefits it provides, and the uses it has.
What is a BVI Company?
A BVI company is a corporation formed in the British Virgin Islands. The term International Business Company or IBC is the official name for what most people think of as “offshore companies” according to Fidelity. An IBC is a private corporation that is used for international business activity because it avoids certain taxes, using strict confidentiality provisions and a flexible organizational structure.
The British Virgin Islands (BVI) joined the world of offshore banking the British Virgin Islands International Business Companies Ordinance in 1984. The islands have become such a popular destination for international companies that many of these companies are just referred to as “BVIs.” In 2004, the BVI Business Companies Act removed the distinction between offshore and local companies in the islands, eliminating any discrimination between the two types and making a BVI offshore company more accessible worldwide.
The BVI have strong political stability and a low international profile, making them an ideal location for an offshore tax haven. BVI has an independent judicial system based on English common law. A significant portion of the country’s gross domestic product comes from offshore financial centers. The U.S. dollar is the official currency. The BVI has more than 600,000 incorporations registered, with more than 5,000 new companies registering every month.
BVI Tax Haven
The British Virgin Islands are what is often referred to as a “tax haven.” Investopedia defines a tax haven as a country that offers foreign individuals and businesses a low tax liability within a politically and economically stable environment. Tax havens share little to no financial information with tax authorities, and do not require companies or individuals to live in or operate out of the country to receive these benefits.
Tax havens are beneficial not only to the individuals and companies using them, but to the host country as well. Tax havens draw capital from their banks and financial institutions, which can result in a strong financial sector. Individuals and companies utilizing a tax haven country have zero to low single digit tax rates, versus the higher rates they would receive in their home country. Along with the BVI, some other countries that are considered tax havens include Andorra, Belize, the Cayman Islands, Hong Kong, Monaco, and Panama. Keep that enjoying those tax benefits depends on your country of residence and/or citizenship. For example, US people are taxed on worldwide income.
BVI Company Benefits
While one of the reasons people choose to incorporate an offshore company is for tax avoidance, depending on the jurisdiction of the owner, that is only one of the many BVI company benefits. Maples explains that the BVI are often chosen for their common law legal principles, administrative simplicity, and security. Beyond that, BVI companies:
How to Use Your BVI Company
With hundreds of thousands of companies incorporated in BVI, and more incorporating every day, it would be nearly impossible to get a complete list of BVI companies. One of the reasons they are chosen, after all, is for their increased privacy. When it comes to making use of a BVI company, however, there are a lot of options to choose from.
Mondaq lists several possible uses for a BVI offshore company in a separate article from above. Asset or property holding is one of the most popular uses, as using a BVI allows for ultimate flexibility in the disposal of the property. A BVI company can act as a holding entity for another company, or may be used to defer taxation and minimize liability when trading companies. The flexibility of a BVI company is great for e-commerce and joint ventures. Trusts and mutual funds can take advantage of the lower taxes and security of a BVI company. A ship registered with a BVI company can apply for British registration. Captive insurance BVI companies – insurance subsidiaries of non-insurance parent companies – can be a valuable tool to lower risk and create tailored financial services for a company.
Set Up a BVI Offshore Company
Setting up your BVI company can be a complicated process, and should be done with the help of an experienced professional to ensure the proper regulations are being followed. According to Mondaq, the BVI Business Companies Act 2004 allows for the creation of five different types of BVI companies:
The most common type of company chosen is a company limited by shares. To create one of these companies, you will need several things. At the beginning of BVI company set up, every company needs a registered agent and address located within the islands. The registered agent is automatically provided for you when you have a professional organization such as this one establish the company for you. Your company formation agent oversees a lot of the beginning tasks, like the incorporation of the company and appointment of its first directors. Directors must be appointed within six months of incorporation, and may be either individuals or corporate entities. At the time of incorporation, the company formation agent will usually also need details of the shareholders.
As a full disclosure, this company establishes offshore companies worldwide. Forming companies in the BVI is a specialty. There are numbers and inquiry forms on this website in order to have a conversation with an experienced consultant and to obtain additional details.
The only documents in the process of incorporation that are a matter of public record are the Memorandum and Articles of Association. Everything else – like the details of a company’s beneficial owners, shareholders, and directors – is not. The register of members and directors, as well as meeting minutes, is securely kept at the office of the registered agent. These files are kept confidential unless the company elects to file them, and are available for inspection only by the shareholders of the company.
BVI Company Registration
An important part of incorporating your BVI is the BVI company registration, which will be the job of your agent (such as the company hosting this page). Per the BVI Business Companies Act 2004, the Registrar of Corporate Affairs maintains the registry of any incorporated companies, foreign companies, or charges. The BVI Financial Services Commission is the sole regulator of all financial services. They must authorize and license any company or person intending to conduct financial business services within the BVI, and regulate those services as they operate in or from the BVI company. Trademarks and patents go through the commission as well.
When registering a company, the company name is required to have a corporate suffix. For example, BVI corporations, also called BVI limited companies, must end their name with either Limited, Corporation, Incorporated, Societe Anonyme, or Sociedad Anonima, and their respective abbreviations such as Ltd., Corp., Inc., and S.A. The BVI has a state-of-the-art filing system that allows company incorporations and post incorporation filings to be made electronically, resulting in a fast turnaround for the registration process. The process usually takes 3-5 days plus shipping time.
BVI Company Bank Account
Once your BVI company is set up, it might be a good idea to set up a BVI company bank account. One of the problems with offshore bank accounts is that often, the account holder needs to be present at the bank at some point in the process of opening the account. However, several BVI banks allow company bank accounts to be opened without the holder being present. Keep in mind the policies in this regard change from time to time. So, there is no guarantee that remote opening is still available in the BVI at the time you are reading this. That is not so important, however, because you can open a company in the BVI that has a bank account elsewhere.
The rules and documentation you will need to open an account vary by bank. Most banks need a copy of your articles of incorporation from your BVI company, an application and various know-your-client documentation. One thing you’ll likely need to provide is the identity, client information, and internal information of the actual beneficial owner of the company. The beneficiary could either be the business owner himself, shareholders or directors, depending on how the business is organized. Additional paperwork involved might include a certified passport copy, a copy of a second photo identification, a banker’s reference letter. This is to your benefit because when you request a withdrawal, the bank will really know it is you making the request and not someone else. Plus, it keeps the good guys in and the bad guys out.
BVI Company Benefits – Conclusion
The above benefits display some of the reasons why BVI is the most popular offshore company formation center in the world. Establishing a company in the BVI offers many financial, possible tax and international business opportunities. To establish a BVI company and to help you choose the right bank for your organization, you can use the number or inquiry form located above.