Opening the British Virgin Islands (BVI) company has become an attractive option for entrepreneurs and investors due to its favorable tax policies, streamlined process, flexible structure and high level of privacy. However, it’s still required to adhere to specific compliance obligations to maintain good standing and avoid penalties. This guide highlights key annual filing requirements that BVI companies must follow. Let’s explore with LNT Consulting.
Annual Renewal
All BVI companies must pay the annual renewal fees to the BVI Registrar of Corporate Affairs. This fee is normally paid through the company’s registered agent, and the amount is different depending on your company secretary and the company’s authorized share capital (standard or higher than 50,000 shares).
The annual renewal date for BVI companies is various depending on the period of date of company incorporation.
- For companies incorporated from Jan – Jun, the due date is 31/05 the following year
- For companies incorporated from July – December, the due date is 31/11 the following year
Moreover, every BVI company is required to appoint a registered agent and local address at all times. Failure to appoint and maintain the registered agent leads to paying the penalty fee and could eventually be struck off the BVI Register of Companies after a specified time.
Economic Substance Filing Requirements
The BVI introduced economic substance requirements under the Economic Substance (Companies and Limited Partnerships) Act, 2018. mandate that certain types of entities, particularly those engaged in specific “relevant activities,” demonstrate sufficient economic presence within the BVI.
The filing requirement applies to entities that conduct “relevant activities,” which include:
- Banking Business
- Insurance Business
- Fund Management Business
- Finance and Leasing Business
- Headquarters Business
- Shipping Business
- Holding Business (pure equity holding entities)
- Intellectual Property (IP) Business
- Distribution and Service Center Business
If a BVI entity conducts a relevant activity, it must demonstrate adequate economic substance in the BVI. This involves:
- Core Income-Generating Activities (CIGA): The entity must conduct relevant income-generating activities within the BVI. Each activity has specific CIGA requirements.
- Substantial Activities: Depending on the activity, the company may need to:
- Hire employees in the BVI.
- Incur expenses related to the business within the BVI.
- Have physical premises in the BVI.
- Ensure management and control are conducted from within the BVI (e.g., holding board meetings in the BVI).
- Adequate Physical Presence: The entity should have a physical office space and sufficient staff or resources in the BVI to support the business.
All relevant entities must file an Economic Substance Report annually with the BVI International Tax Authority (ITA). Reports are typically filed through your BVI registered agent, who submits them on the Government portal on behalf of the company.
The filing deadline is within six months of the end of the entity’s financial year. Failure to comply with the economic substance requirements can lead to significant penalties, such as financial penalties, strike-off and dissolution.
Annual Return Filing Requirements
According to the amendment of BVI Business Companies Act which came into force on 1st Jan 2023, all BVI companies must file the annual return within 9 months after the financial year end. For example: If your business financial year end is 31st Dec 2023, the due date of annual return filing will be 30th Sep 2024.
You can check more information from the BVIFSC website here: https://www.bvifsc.vg/news/2024-filing-annual-returns
However, there are certain exceptions. A BVI-registered company is not required to file an annual return if:
- It is publicly listed on a stock exchange.
- It is regulated and submits financial statements to the BVI Financial Services Commission (FSC) in line with financial services legislation requirements.
- It is in liquidation, provided that the annual return was not due prior to the start of the liquidation process.
The Annual Return is the simple format, comprising the balance sheet and profit and loss statement. No need to audit the annual return form and it won’t be publicly disclosed.
Any BVI companies that fail to file the annual return may have to pay the penalties.
In conclusion, adhering to annual compliance requirements is essential for BVI companies to maintain good standing and fulfill legal obligations. Non-compliance can lead to significant penalties and restrictions. Engaging professional assistance can be beneficial for companies to navigate these requirements effectively and ensure seamless operations in the BVI regulatory environment.
Disclaimer: LNT Consulting aims to provide up-to-date and accurate information on this website. However, this information is intended for reference only and should not replace professional legal advice. For guidance on your specific case, please contact LNT’s customer service.
