Advantages to incorporate in British Virgin Islands

Offshore incorporation services – BVI Business Companies

BVI Business Company (BC) is the most commonly used official name for what is more popularly known as an “offshore company”. BC’s are the basic building blocks of the offshore financial services industry.
Essentially, a modern BC is a private corporation that is exempt from tax, suitable for virtually any international business activity, has a flexible organizational structure, is not burdened by excessive reporting and record-keeping requirements, and maintains strict confidentiality provisions.

BVI BC’s are very popular and widely used offshore companies because of their administrative ease, flexibility, taxation exempt status and the fact that they are widely accepted and understood by the international financial community. BVI BC’s may not own real property in the BVI, other than the lease of an office, and may not carry on banking or trust business (unless licensed under the Banks and Trust Companies Act, 1990) or insurance or re-insurance business (unless licensed in the BVI to carry on that business). Otherwise, BVI BC’s may engage in any activity that is not illegal under the laws of the BVI subject to any restrictions in their Memorandum of Association.

Advantages

These are some of the general advantages to incorporate in BVI, British Virgin Islands, over many other offshore financial centres:
US dollar is the official currency in the BVI – therefore, by definition, there can be no currency controls and no artificial manipulation of the money supply by the local government.
BVI are a British Overseas Territory, which provides for outstanding political stability. The country also maintains a low international profile and a clean reputation, thus avoiding the pitfalls experienced by some more publicised and less scrupulous offshore tax-havens.
BVI has an independent judicial system based on English Common Law. Laws and regulations are routinely developed in consultation with the private sector. The offshore financial services sector contributes a very significant part to the country’s gross domestic product. Therefore, an inherent and pronounced interest exists both with the government and with the general public to maintain and develop the country’s status as a competitive offshore financial centre.
BVI is an independent country with a fairly high standard of living. Therefore, it avoided entering any information-sharing agreements with foreign countries or organizations for the exchange of financial aid. Client confidentiality is robustly enshrined in the BVI corporate and business legislation.
BVI is easily accessible by sea and air, has modern telecommunications and is on US Eastern Standard Time (1 hour behind EST in winters).

The most important characteristics of a BVI BC in detail – exemption from tax

A BVI Business Company is exempt from the BVI income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realised with respect to any shares, debt obligations or other securities of the company. No estate, inheritance, succession or gift tax is payable with respect to any shares, debt obligations or other securities of a BVI BC. All transactions and instruments relating to transfers of any type of property of assets, shares, debt obligations or securities to or by a BVI BC are exempt from the stamp duty, with a sole exception for land-ownership transactions in the British Virgin Islands, in which case stamp duty remains payable. You can find here the procedures to incorporate in BVI.

Legal personality

A British Virgin Islands Business Company has a separate legal personality and the same powers as a natural person.

Secrecy

Confidentiality is one of the key features of the BVI Business Company as details of the company beneficial owners, directors and shareholders are NOT part of public record. Register of Members, Register of Directors and all Minutes and Resolutions by the Company are kept only at the offices of the Registered Agent in complete confidentiality. Certainly, though, these files are available for inspection to Company shareholders.

The only documents held on public record are the Memorandum and Articles of Association, but these normally do not contain any indication as to the actual shareholders, directors or the beneficial owners of the company.

At the same time, if the owners of the company so wish, the Register of Directors and/or the Register of Members may be filed with the Registrar of Companies. Such step may be desirable if a complete certainly must be achieved and showed publicly as to the actual identities of the Company managers or members – but, again, this is purely optional.

Structural flexibility

A BVI Business Company requires a minimum of only one owner, one shareholder, and one director. All of them can be one and the same person. Apart from the director, the company need not appoint any operating officers. The management structure of the BVI Business Company may be designed in accordance with the widest variety of requirements.

The shareholders, directors and officers of a BVI Business Company may be individuals or corporations and of any nationality. The shareholder’s or director’s meetings need not be held in the British Virgin Islands and there is no requirement for an Annual General Meeting.

Meetings can be held by telephone or other electronic means; alternatively, directors, as well as shareholders, may vote by proxy.

Where a Business Company has only one member who is an individual and that member is also the sole director, such sole member/director may specifically appoint a reserve director to act in his place in the event of his death.

Provisions against confiscation

If a foreign Government or authority seizes Company shares, or any other interest in the Company in connection with nationalization, expropriation, confiscatory tax, other governmental charge or with a similar cause the Company or a shareholder may apply to the BVI court for an order that the Company disregard the seizure and continue to treat the person from whom the shares were seized as continuing to hold the shares.

No reporting

BVI Business Companies does not have an obligation to prepare of file financial accounts. However, records must be kept that are sufficient to show and explain the Company’s transactions; and will, at any time, enable the financial position of the Company to be determined with reasonable accuracy. Such records do not have to be kept in the British Virgin Islands and the location for keeping such records can be freely determined by the owners of the Company, and there is no requirement whatsoever to file or otherwise make public any commercial or financial records of the Company.

Various types of incorporations

A BVI Business Company may be incorporated as a company limited by shares, a company limited by guarantee (with or without authorisation to issue shares), an unlimited company (with or without authorisation to issue shares), a segregated portfolio company and a restricted purpose company.

No requirement to state operational objects

Since 2005, there is no requirement to specify the operational objects of the BVI Business Company in the foundation documents of the Company (Memorandum and Articles of Association). However, the company may choose to do so and, indeed, a specific type of a “restricted purpose company” is envisaged by the Business Companies Act.

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