BVI Tax Exemption
It is not a secret that the BVI is extremely popular as an offshore haven offering outstanding tax benefits to non-residents. The BVI is among those fifty countries in the world which are admitted as offshore centres; moreover, it is considered to be the most popular tax haven, along with such jurisdictions as Panama and Seychelles.
Tax Avoidance and Tax Evasion: difference between these 2 terms
Offshore tax benefits may take different forms in the BVI and in the other jurisdictions, but the key concept for them all is tax avoidance. There is also another term which can be used in specific cases – tax evasion.
It seems quite useful to explain the difference between these two terms which are very much different. From the legal point of view, tax avoidance is legal while tax evasion is crime. Tax avoidance generally means creating and organizing such business structure which would pay minimum possible amount of taxes without breaking the law.
How different is BVI from other US and EU countries offering full tax exemption?
All international offshore financial services industry which is functioning on a legal basis is about tax avoidance and not about tax evasion. The main function of offshore jurisdictions is to offer efficient instruments or opportunities for tax avoidance and for asset protection. It is complete tax exemption for all international business operated by non-residents (Seychelles and Belize IBC’s), local tax exemption for non-residents of the jurisdiction (Gibraltar), zero tax on receipt and distribution of dividends (Cyprus and Denmark holding companies), favorable tax treatment through double treaties and agreements (Cyprus, Malta, Netherlands), zero income tax for all BVI Business Companies.
BVI Business Companies are exempt from the BVI income tax, from tax on dividends, interest, royalties, compensations and other amounts paid by a company; also they are exempt from all the capital gains, estate, inheritance, succession or gift tax with respect to any shares, debt obligations or other securities of the BVI IBC’s. The companies are exempt from any kind of stamp duties relating in any way to its assets or activities, with an exception for land-ownership transactions in the BVI: in that case stamp duty remains payable.
It should be noted that practical implementation of offshore strategies depends very much on the anti-avoidance legislation that may be implemented in the country of citizenship, domicile or business of the beneficial owner. For this reason we can recommend to all potential customers to obtain a qualified tax advice from specialists in their country of residence, domicile or business operations.
IBCs do not pay income taxes or stamp duties. Non-residents of BVI are exempt from the income tax payable on interest, dividends, rents and royalties, compensations and other amounts which are paid to the person by the IBC. There are no capital gains taxes, inheritance taxes and death duties.
Taxation of the BVI IBC on profits
An international business company is exempt from any tax on its world-wide profits to the British Virgin Islands authorities.
Double taxation agreements
The British Virgin Islands have double taxation treaties with Japan and Switzerland, although these treaties have limited benefit and are not applicable to offshore business.
Tax information exchange agreements
A Tax Information Exchange Agreement (TIEA) is a bilateral agreement that has been negotiated and signed between two countries to establish a formal regime for the exchange of information relating to civil and criminal tax matters.