What Is a BVI Company?

BVI is much on the minds of tax planners.

A BVI Company is a company chartered by the British Virgin Islands, a popular offshore jurisdiction for tax planning among some high net worth U.S. residents.

Zero Corporate Income Tax

The corporate income tax rate in the BVI

The BVI does not tax any of the income of any of the companies chartered there.

International Criticism

Favorable treatment for offshore companies is sometimes called "ring fencing."

In 2004, the BVI modified its laws, replacing the older International Business Companies Act with the newer BVI Business Companies Act. This reform was designed in part to to deflect international criticism--critics such as the Organization for Economic Co-operation and Development (OECD) had complained that the BVI was treating international companies more favorably than its own domestic companies, so that the international businesses were receiving state aid.

The BVI addressed this complaint by abolishing taxation of its domestic businesses, too, eliminating the distinction between domestic and offshore companies.

Criticism Deflected

The 2004 and other subsequent measures have largely deflected the criticism. In August 2009 the BVI was accepted onto the OECD's so-called white list, the list of countries that have substantially implemented internationally agreed-on standards as to tax law, and the exchange of information among tax authorities.

References

• Fidelity Corporate Services: Company Structure and Registration Procedures in the BVI
• Tax News: BVI Makes OECD White List

Resources

• Business BVI: BVI on OECD "White List"