28 February 2008Fast Fact Guide
Business BVIThe Business BVI Fast Fact Guide
Facts At a Glance | |
|---|---|
Population | 25, 802 (2005e) |
Population Density | 167.6 |
Time Zone | AST |
Capital City | Road Town |
Currency | United States Dollar |
Language | English |
Literacy | 98.2% |
Life Expectancy at Birth | 79.2 |
Country Phone Code | 284 |
Unemployment | 3.1% |
Zip Code | VG1110, VG1111, VG1112 |
Major Industries | Tourism and Financial Services |
Principal Exports | Tourism and Financial Services |
Principal Imports | Consumer Goods, Machinery, Food and Beverages, Construction Materials |
Source: BVI Development Planning Unit
Location
Located at 18.25 degrees north latitude and 64.30 west longitude is the beautiful British Virgin Islands (BVI). An archipelago of 40 islands, rocks, and cays. The main islands are Tortola, Virgin Gorda , Jost Van Dyke and Anegada. The islands are tropically located, endowed with pristine beaches and tranquil atmospheres.
Climate and Geography
With the exception of Anegada whose coral island is flat and ringed by the second-largest coral reef in the world, the British Virgin Islands are volcanic in origin. Most of the islands are mountainous, with wide bays fringed by powder-white sand beaches. The highest point in the BVI is Mount Sage, at 1,716 feet above sea level.
Lying just over 1,000 miles from the equator, the BVI enjoys a sub-tropical climate. Tempered by variable trade winds, temperatures rarely drop below 77°F (25°C) in the winter, or rise above 90°F (32°C) in the summer. The average temperature is 83°F (28°C). Rainfall in the BVI averages 40 inches per year, with 70 percent of rain falling between April and October.
The Government
The BVI is an overseas territory of the United Kingdom, with a large degree of internal self government. Originally settled by the English, Dutch, French and other Europeans, the Virgin Islands has been under the British Flag since 1672. A local government was first established during the plantation era, and functioned until 1902. In 1950, the local Legislative Council was re-established. Shortly after that, a ministerial system of government was established.
Today, the 13-member unicameral House of Assembly is the highest law-making body in the territory. Following an election, the majority political party forms the Government, and the Premier, who in turn names four other Ministers of Government form the Cabinet, which sets government policy. The Governor, who is appointed by the Queen, is responsible for the administration of the courts, internal security, defense, and public service; all other areas are the responsibility of the local government.
General elections are required by the constitution every four years, although they can be held more frequently.
Legal System
The Territory’s judicial system is based on Common Law, and consists of a Court of Appeals, High Court, Magistrate’s Court and an Office of the Registrar of the High Court. The highest court of appeal for the BVI is the Judicial Committee of the Privy Council in London. The Appeal Court and High Court are associated with the Organization of Eastern Caribbean States (OECS) of which the BVI has been an Associate Member since 1984.
Population and Labour Force
The British Virgin Islands is a diverse and growing community. The last census found that more than 26,000 live in the Territory. Approximately 83 percent of the population is of Afro-Caribbean decent. The remaining population is Caucasian (7%); mixed (6%); and East Indian (2%). Smaller minorities of Chinese, Middle Eastern, and other ethnicities exist.
The BVI’s population is growing at a rate of approximately 2% per year, driven mostly by inward migration. In 2004, 63% of the workforce was foreign-born.
There are twelve paid public holidays in the BVI, and the local labour code sets modest requirements for paid sick and holiday leave. There are no labour unions and no tradition of industrial action. The local labour department mediates most labour disputes. Local law requires that employers hire qualified BVIslanders before they will be granted a work permit to hire a non BVIslander.
The BVI Government is the single largest employer in the BVI. The BVI Government employs over three thousand employees. The other major employers are in the private sector. There is a very high demand for human resources in the BVI. People come from all over the world to fill vacant positions. This has been the practice here for decades.
Social Services
Education
There is compulsory education up to age 16. The Government’s Ministry of Education operates 17 primary schools and four secondary schools, including a technical-vocational school and a school for disabled students. There are also several private primary and secondary schools; some parochial and some secular. The H. Lavity Stoutt Community College is a two-year tertiary institution. Programmes are developed at HLSCC in response to labour force needs; for example, the college offers special courses for the marine, hospitality and financial services industries.
Health
The Government of the British Virgin Islands has recently embarked on the development of new health infrastructure.
In early 2006, a helipad to facilitate the transfer of patients from the outer islands to Tortola was completed and in early 2007, the new 120 bed hospital was started.
Currently, primary health care is provided by Peebles Hospital, with extensive services being provided also by a small private hospital and several medical clinics. It is hoped that by the end of 2008, the new hospital will be completed with the simultaneous return of a number of medically trained staff returning from training overseas.
The Economy
The British Virgin Islands economy is one of the strongest in the Caribbean region. The 2006 Gross Domestic Product was 1.008 billion dollars. Renting, leasing and business services account for more than one quarter of GDP. Other major contributors are hotels and restaurants, financial services, and distribution.
The economy is service oriented, with financial services and tourism as the two leading industries. There are small farming, fishing and manufacturing sectors. The BVI imports a wide range of goods and services each year. Most of these, more than 85%, come from North America. The rest come from Latin America, the Caribbean and Europe. The U.S. dollar is the official currency of the BVI, and the Territory’s financial system is closely integrated with that of the United States. The BVI Government has a history of sound financial management, and the Territory enjoys one of the smallest foreign debts in the region.
There is very low unemployment in the BVI; in fact, due to the rapidly expanding economy, labour is imported from around the region and the world. Official statistics are that 63 percent of the Territory’s 16,049 workers are foreign born. Unemployment is estimated at 3.3 percent.
Primary Sectors
Tourism
Tourism Arrivals (43% of which were land based) | ||||
|---|---|---|---|---|
Market | 2005e Arrivals | 2006e Arrivals | Actual Change | % Change |
USA | 565, 215 | 572, 122 | 6, 907 | 1.2 |
Canada | 24, 462 | 26, 046 | 1, 584 | 6.4 |
UK | 89, 343 | 78, 404 | -10, 939 | -12 |
Europe | 102, 144 | 103, 576 | 1, 432 | 1.4 |
Other | 39, 602 | 45, 455 | 5, 853 | 14 |
Total | 820, 766 | 825, 603 | 4, 837 | 0.5% |
Source: The BVI Tourist Board
As with most Caribbean destinations, the British Virgin Islands also, earns most of its revenues from tourism, with over 45% of national income derived from tourism.
The BVI’s tourism product is defined by upscale resorts and villas and nature based activities. Sailing is one of the most popular activities for tourists, and the BVI has the largest charter boat industry in the Caribbean region. The BVI has fostered its reputation as a destination for sophisticated travelers, and the average visitor to the BVI has a household income of well over $100,000. Major attractions include the Baths National Park on Virgin Gorda and wreck of the Rhone underwater park between Salt and Peter Islands. Water sports such as scuba diving, snorkeling, windsurfing, kite boarding and kayaking are popular. All the islands have excellent beaches. Annual events including the BVI Spring Regatta in April, the BVI Music Fest in May, and the Emancipation Festival in August attract large numbers of visitors.
The Government has a policy to encourage investment in this sector, and several major new resorts are under development. In addition, the Government has encouraged greater local involvement in the tourism sector by expanding benefits under the Hotel Aid Ordinance to include small, locally owned villas.
International Business and Financial Services
The business environment in the BVI is supported by a sound legal system, efficient and effective regulatory environment, stable government and quality infrastructure. The territory also offers a range of financial service products, including its signature BVI Business Company. Over the last two decades, the BVI has worked to diversify the financial service products available, and as a result, there has been strong growth in the trust and estates, investment business, captive insurance and more recently, corporate restructuring and insolvency sectors.
There is strong public-private cooperation on matters of financial services. The industry is regulated by the independent Financial Services Commission, which is responsible for licensing financial practitioners and ensuring compliance with international laws and regulations. Professional organizations, such as the Registered Agents’ Association, also set best-practice guidelines for persons working in the sector. The success of the BVI’s finance sector has attracted some of the world’s most prestigious law, accounting, insurance, corporate administration and consulting firms.
The Government maintains a policy to promote the BVI’s financial services sector through the BVI International Finance Centre, a department within the portfolio of the Chief Minister’s Office, and has organized road shows in London, New York, Hong Kong, Singapore, Miami, Geneva, Shangai and other international finance centres. The financial services industry provides more than half of the government’s annual revenues and an equally significant share of national income and employment.
Important Components of the BVI's Financial Services Sector Are:
A. Corporate Law & Business Companies
B. Insurance
C. Mutual Funds
D. Trust & Estates
E. Shipping
F. Trademarks
G. Real Estate
H. Banking
I. Taxation
(A) Corporate Law And Business Companies
The BVI built its reputation as a leading international finance centre around the registration and domiciliation of International Business Companies (IBC’s). One of the main attractions of this corporate vehicle has been its flexibility of use – IBCs have featured in just about all types of business transactions, from simple personal holding companies and passive investments to complex corporate structures, joint ventures for cross-border trading, structured finance components, and for IPOs and listings on stock exchanges around the world.
On January 2005, the much anticipated BVI Business Companies Act, 2004 was introduced. The BVI BC Act has now, following a two year transition period (ending on December 31, 2006), repealed the IBC Act on 1 January 2007 and now exclusively regulates all companies incorporated in the British Virgin Islands.
(B) Insurance
Statistics from the Financial Services Commission show that the BVI has licensed nearly 550 captive insurance companies since the introduction of its Insurance Act; 400 of these remain active. The region of origin of most BVI-domiciled captives was the United States, although other countries of origin include Guernsey, Taiwan, Switzerland, the Middle East and South America. The BVI now boasts the world’s third largest offshore captive insurance industry.
Insurance Sector License Holders By Type | |||
|---|---|---|---|
| 2004 | 2005 | 2006 |
Captive Insurers | 346 | 380 | 400 |
Domestic Insurers | 27 | 28 | 30 |
Insurance Managers | 17 | 23 | 22 |
Source: Financial Services Commission
(C) Mutual Funds
The BVI introduced legislation tailored for mutual funds in 1998; The Mutual Funds Act, which for the first time provided a legal and regulatory framework for the investment fund business. Since then, the industry has been growing steadily and the BVI is now the second largest hedge fund jurisdiction, after the Cayman Islands.
Key advantages to registering a mutual fund in the BVI, include, no regulatory restrictions on investment policies or strategies, performance, or fees. There is a fast-track procedure for professional funds and in most cases you are able to amend the memorandum and articles of association without requiring a vote of members. In addition, there is no requirement for a local auditor to sign off on an account and the new BVI Business Companies Act introduced statutory provision for segregated portfolio ring fencing for mutual/hedge funds.
(D) Trusts And Estates
The main governing law of trusts in the BVI is the Trustee Act 1961. Not unlike other pieces of legislations, that Act is largely based on U.K. Law, specifically the U.K. Trustee Act of 1925. Two major series of amendments have updated the provisions of the Act i.e. The Trustee Amendment Acts of 1993 and 2003.
Types Of Trusts | |
|---|---|
Discretionary Trusts | Fixed Trusts |
Accumulation & Maintenance Trusts | Protective Trusts |
Charitable Trusts | Purpose Trusts |
VISTA Trusts | |
Source: Financial Services Commission
The Virgin Islands Special Trusts Act, along with amendments to other related pieces of legislation, took effect in March 2004, thereby creating a new and exciting trust regime in the British Virgin Islands. The Virgin Islands Special Trust Act trust, or VISTA trust, overcomes many problems associated with the “prudent man of business rule”, which typically made trusts unattractive vehicles to hold assets which settlors intended trustees to retain. The Act enables a shareholder to establish a trust of his company which disengages the trustee from management responsibility and permits the company and its business to be retained as long as the directors see fit.
Parallel to establishing a VISTA regime, the BVI also revised its Trustee and Property Acts in order to enhance the attractiveness of trusts. Changes include provisions to make trusts more attractive in a commercial context and a new set of conflict of law rules that contain robust, comprehensive, and carefully crafted provisions to protect BVI trusts against “forced heir ship” claims. In addition, the rules surrounding trust duty have been updated to make it clear what documents are subject to trust duty and how this must be paid. At the same time, rules which require no public register of trusts are retained, thereby protecting confidentiality.
(E) Shipping
As the sailing capital of the Caribbean and an esteemed corporate domicile, the BVI is the preferred jurisdiction for ship registration. Now that the BVI has been declared a Category One Register, within the Red Ensign Group, large cargo vessels of unlimited tonnage and mega yachts of up to 3,000 gross tons can now be registered in the territory.
For both categories, the owner must be a Virgin Islands citizen, British citizen, British Overseas Territories citizen, British subject, a British national under the Hong Kong Order 1986, a national of a European Union member state of the European Union or a British possession, including the British Virgin Islands. If you do not meet the nationality requirement, you may register a company in the BVI in order to register a vessel.
In order to register a ship in the BVI, it must be first de-registered from its current registry. Next, a survey of the vessel would need to be commissioned and ownership documents submitted to the Registrar of Shipping. The registration fee is $550, and an annual fee of $100.00 is payable to maintain registration. In addition, there will be legal fees charged by the firm chosen to assist with registration.
(F) Trademarks
The BVI is not a Convention country, and so protection of a trademark depends exclusively on registration of that mark in the BVI, regardless of how well known that mark is. In general, trade marks may not be registered in the BVI if they are identical to a trademark already registered; is deceptive or is calculated to be deceptive; is of scandalous design; is descriptive to the goods to which it relates. Trademark registration is valid for 14 years and is renewable for further consecutive periods of 14 years.
(G) Real Estate
Associated fees for land purchase | |
|---|---|
Application for license by a company | $500 |
Issue of license to a company | $1,000 |
Application for license by an individual | $200 |
Issue of license to an individual | $600 |
Application by a company for extension of time to register license | $300 |
Application by an individual for extension of time to register license | $100 |
Source: Development Planning Unit
The Non-Belonger Land Holdings Regulation Act requires that any non-belonger must obtain an alien land holding license in order to purchase land. One is advised to engage a local attorney to assist with the application process. The processing of applications takes about 90 days.
All sales of land are subject to a 12% stamp duty. It is charged on the consideration paid for the property; or the value of the property, whichever is higher.
(H) Banking
The British Virgin Islands uses the United States dollar and enjoys stable currency and banking. A wide range of services is available from the Territory’s six commercial banks: Scotiabank (BVI) Limited , Development Bank of the Virgin Islands, Banco Popular de Puerto Rico, VP Bank (BVI), First Caribbean International Bank, Firstbank Virgin Islands. The banking sector is regulated by the BVI Financial Services Commission, but banks set their own policies as to credit reserves requirement, credit control, and interest rate regulation and rediscount facilities.
(I) Taxation
There is no income, corporate or personal tax in the BVI. In addition, there are no withholding tax, sales tax, value added tax, capital gains tax, capital transfer tax, estate duty, inheritance tax, or succession tax. Goods imported to the Territory are subject to customs duty ranging from 0-20%.
When the BVI abolished its personal and corporate income taxes in 2005, it instituted a payroll tax to be charged on every employer who carries on business in the BVI. The tax is payable on remuneration paid to every employee and deemed remuneration paid to every deemed employee who is wholly or mainly in the BVI, whether or not remuneration is paid in the BVI. In addition, self-employed persons are liable for payroll tax on his or her deemed remuneration.
For the purposes of the Payroll Tax Act; a partner in a partnership or a shareholder in a company, is considered a deemed employee if he or she renders services to the partnership or company and otherwise than as an employee participates in income. Remuneration is broadly defined as wages, salary, leave pay, bonus, gratuity, profit-sharing payments, severance pay, rent, and other benefits. Remuneration is not dividends paid by a company registered in the BVI or payments made by or under any health insurance or pension scheme approved by the Commissioner of Inland Revenue.
Deemed and self-employed employees are taxed on their deemed remuneration. Deemed remuneration is his or her actual remuneration or his “notional remuneration”, whichever is greater. Notional remuneration is an amount which represents a fair and equitable valuation of the deemed employee’s services to the business.
There are two categories of employers under the payroll tax. A Class One employer is one with a payroll that does not exceed $150,000, whose annual turnover does not exceed $300,000, and whose number of employees and deemed employees does not exceed seven. A Class Two employer is one who does not qualify under Class One.
Class One employers must pay payroll tax of 10%, while a Class Two employer pays at 14%. An employer may deduct and retain up to 8% of an employee’s remuneration to cover his payroll tax liability. However, no deduction may be made with respect to the first $10,000.00 of actual remuneration paid to an employee. The balance of the payroll tax, 2% for Class One employers and 6% for Class Two, is borne by the employer.
Infrastructure
Electricity
Electricity in the BVI is 110/220 voltage. This Power is generated by the BVI Electricity Corporation, which is owned by the BVI Government. Water
The BVI Water and Sewerage Department, provides potable water throughout Tortola, Virgin Gorda, Jost Van Dyke and Anegada. Most of the water sold by the Water and Sewerage Department is desalinated sea water, treated through the process of reverse-osmosis.
In addition, most buildings and homes are constructed with cisterns (Water Tank). Rainwater is collected in these cisterns from the roof of the buildings or homes and flows into the cisterns through a guttering system. This water is safe for domestic use. There are also several local water companies which sell purified drinking water.
Telecommunications
The BVI has a modern and high-quality telecommunications infrastructure. This existed since the 1960’s. In 2006, the Government passed a new Telecommunications Act, which provides for gradual liberalization of the telecommunications sector. Because of this, there are now two companies offering mobile telephone services, with pending competition in other service areas. The area code is 284 and available services include long-distance and local land-line communication, wireless connectivity, high-speed Internet, and cable television.
Transportation
It is easy to get around the BVI. Vehicles such as cars, buses, taxis etc., private and commercial boat services, and airplanes are among the most frequently used means of transportation in the BVI.
The Territory has a road network of approximately 200 miles, of which 160 miles are paved. These include main roads, primary, secondary, collector, and access roads, as well as agricultural feeder roads. The Public Works Department is the department charged with the periodic maintenance of this road system. This department also spearheads plans for road expansion.
There are four official passenger sea ports in the BVI: Road Town and West End on Tortola; Great Harbour on Jost Van Dyke; and Spanish Town on Virgin Gorda. Port Purcell, near Road Town, hosts the principal cargo port in the Territory. The BVI Ports Authority manages the port facilities at the various locations, as well as the Cruise Ship Pier in Road Town.
Airports
The BVI Airports Authority is the administration that oversees the airports. The Terrance B. Lettsome International Airport (code: EIS), is the main airport in the BVI; and is located on Beef Island which is joined to Tortola by a short bridge. There are daily flights to and from Puerto Rico, Antigua, St. Martin and other Caribbean Islands. The Government operates a helipad in Road Town and a number of private islands also maintain helipads.
Entry and Immigration
Visitors to the BVI may be granted entry for up to one month at the ports of entry, providing they have return or ongoing travel arrangements, accommodations while in the Territory, and proof of sufficient means of support. Visitors wishing to stay longer must apply in person at the Department of Immigration in Road Town, Tortola, or the Valley, Virgin Gorda.
A valid passport is the principal requirement for entry into the BVI. On arrival to the BVI, you will go through screening by the Immigration Department as well as Her Majesty’s Customs. Your luggage and person are subject to search.
Oyster Publications Inc, PO box 3369, Road Town Tortola, British Virgin Islands, VG1110