Advantages of doing business in the British Virgin Islands
Global business hub in the Caribbean
The BVI is the Caribbean’s global business hub and has long attracted businesses from around the world due to its strategic and administrative benefits.
Getting an entity started is an easy and quick process. Once started, corporate processes are efficient and administrative costs associated with incorporation are low. Ongoing entity maintenance is simple and compliance obligations are non-onerous.
Doing business in the BVI brings significant tax benefits. The BVI is also a tax neutral territory. There is no income tax, corporate tax, capital gains tax, wealth tax, or similar fiscal laws.
Alongside tourism, financial services are one of the BVI’s main economic drivers. There are an estimated 950,000 companies registered in the islands and the BVI is considered one of the major players in this sector.
Close ties to the U.S. Virgin Islands
The BVI has close economic ties to its neighbor islands, the U.S. Virgin Islands, so much so that it has adopted the U.S. dollar as its official currency. This makes it an easy and attractive location for U.S. companies to do business there.
Risks and considerations
Despite the significant advantages outlined above, the BVI present some very real challenges of which outside investors and businesses should be cognizant.
Economic substance reporting
Any business entity operating in the BVI must comply with its government’s Economic Substance Act (ESA). The ESA requires that relevant legal entities must demonstrate adequate presence and/or conduct substantial economic activities if they are located in the BVI for tax purposes.
Like other substance laws, the ESA is intended to ensure that BVI entities (whether formed in the BVI or registered foreign entities) that carry on certain activities have demonstrable economic substance in the BVI. That is to say, relevant entities must demonstrate they have sufficient economic activity in the country to justify the profits they’re making. Read more about the requirements of this important piece of legislation.
Obtaining a business license
Business license requirements are extensive in the BVI. Significant documentation and proof must be provided that the company has the technical and operational capabilities to successfully run their specific business.
Furthermore, processing times are lengthy and can take between four and six weeks for approval.
Obtaining work permits
The BVI is very protective of its local workforce. As a result, work permit applications can take anywhere from seven to ten weeks. The requirements for approval are also very specific and ongoing labor-related regulation can mean that permits must be updated frequently.
Every culture is different and, as with the rest of the Caribbean, the business climate in the BVI is more relaxed compared to the U.S. This means that U.S. businesses should become accustomed to a different procedural and process pace – in the BVI nothing is rushed and manners and politeness count.
Another important consideration is that because tourism and financial services are the main economic drivers in the BVI, the environment is transitory with a low level of permanent residents.