The British Virgin Islands (BVI) are a well-known offshore tax haven located in the central Caribbean, about 5 km northwest of the United States Virgin Islands and near Puerto Rico. The capital of BVI is Road Town, situated on the largest and most populated island called Tortola, which has a population of 23,400. BVI consists of 60 islands and cays, covering a total land area of 150 sq. km and with a population of 31,196. BVI is a British dependent territory and not an independent country. It maintains close ties with the United Kingdom, which is responsible for defense and external affairs. The BVI government operates under a ministerial system with a constitution adopted in 1967. The legal system is based on English Common Law with some local modifications and statutes, similar to the Cayman Islands.
The political and economic environment in BVI is highly stable, and it enjoys a tax-free jurisdiction status. English is the official language, and the national currency is the US dollar. Crime and unemployment rates are low, and there are no exchange controls. Non-residents are exempt from domestic taxation, and BVI does not impose inheritance or sales tax, capital gains tax, capital transfer tax, or estate tax. For residents, the maximum withholding tax rate is 15% for dividends, while nominal rates apply to interest income and there is no withholding tax on royalties. Income tax was abolished in 2006, replaced by a payroll tax of 14%. BVI has implemented the European Union’s Savings Tax Directive since July 1, 2005, which includes a withholding tax on savings paid to nationals of EU Member countries. However, the Directive does not apply to corporate entities. The government has been considering the elimination of personal and corporate taxes, resulting in very low or no taxation. This favorable tax environment has contributed to the prosperity of the BVI economy, making it one of the most successful in the Caribbean. The telecommunications services in BVI, including telephone, telex, facsimile, and the Internet, are excellent. Courier services such as FedEx and DHL are available for efficient document delivery.

The British Virgin Islands is widely recognized as a favorable jurisdiction for incorporating offshore companies. Since 1985, BVI has offered offshore registration for companies seeking incorporation. The government has enacted laws such as The Companies Act 1985 and the International Business Companies Ordinance 1984 to facilitate the formation of International Business Companies (IBCs). Incorporating an IBC in BVI is relatively inexpensive and provides owners with complete control over their assets, along with privacy and privileges. These offshore companies can hold assets and conduct transactions, while enjoying confidentiality as the owner’s identity remains protected. Additionally, IBCs are not subject to any tax on their worldwide profits by the BVI authorities. As of 2019, there were over 750,000 companies registered in the offshore registry.

BVI has a modern and sophisticated banking sector. The jurisdiction offers banking and legal statutes that enhance bank secrecy for individual and corporate accounts. BVI’s safe offshore banking system, combined with excellent infrastructure and a sound legal system, makes it an ideal destination to diversify wealth. The banking framework in BVI includes trusts, foundations, IBCs, mutual funds, and insurance services, which can provide protection against legal suits, divorce, currency devaluations, and other risks. While tourism is the largest industry, BVI is emerging as a major international financial and banking center, comparable to Jersey in the English Channel.