Introduction to the British Virgin Islands
Location and history of BVI
The British Virgin Islands are to be found at latitude 18 deg. N, 64 deg. W or about 60 miles east of Puerto Rico. There are about 60 islands and cays of which 16 are inhabited and with a land area of 59.3 square miles. The population is about 23,000; the capital and financial centre is Road Town on Tortola Island. The predominant industry is tourism.
The history of the British Virgin Islands can be traced back over many centuries. They were originally inhabited by the Ciboney Indians from the Americas, followed in turn by the Arawaks and finally by the Caribs. They first came to the notice of Europeans in 1493 when Columbus discovered them on his second voyage.
The islands were invaded, but not settled, by the Spanish in 1555. The first European inhabitants were French. In the sixteenth and seventeenth centuries they were used as bases by buccaneers and pirates who terrorised the Caribbean shipping lanes. Dutch settlers arrived in 1648 and British settlers took control in 1666. Since that time the British Virgin Islands has been a British colony.
BVI Government
The British Virgin Islands is a constitutional democracy. The Head of State is the British monarch whose representative on the islands is the Governor. There is Legislative Council, which is elected for a maximum of four years. The Governor appoints the Chief Minister from amongst the elected members.
BVI Taxation
Under changes introduced to comply with its international obligations, the British Virgin Islands abolished corporate income tax and replaced it with a zero rate tax regime, which now applies to both offshore and onshore companies. There is a payroll tax for employees but no capital gains tax, estate tax, V.A.T. or sales tax. There is no withholding tax but the British Virgin Islands was forced to adopt the European Savings Tax Directive, which requires reporting of savings interest paid to individuals in the European Union.
Regulation of the British Virgin Island Financial Services sector
The Financial Services Commission Act, 2001 established the British Virgin Islands Financial Services Commission as an autonomous regulatory authority responsible for the regulation, supervision and inspection of all financial services in and from within the BVI. Such services include insurance, banking, trustee business, company management, mutual funds business as well as the registration of companies, limited partnerships, intellectual property and ships. As a result, the Commission now oversees all regulatory responsibilities previously handled by the government through the Financial Services Department. The Commission has also been tasked with new responsibilities including promoting public understanding of the financial system and its products, policing the perimeter of regulated activity, reducing financial crime and preventing market abuse.
The establishment of the Commission also ensures a commitment by the BVI to play its part in the fight against cross border white-collar crime while safeguarding the privacy and confidentiality of legitimate business transactions.
Financial Service Companies in the British Virgin Islands
There are numerous offshore banks, insurance companies and offshore mutual funds registered in the British Virgin Islands but the territory is best known as a favourite location for the formation of offshore companies. There are probably more offshore companies than in any other offshore financial centre. The British Virgin Islands International Business Company is used extensively throughout the world. The original international business companies’ act was amended and updated and re-enacted as the Business Companies Act 2005. All existing companies are re-registered as British Virgin Islands Business Corporations under the new Act.
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