BVI Taxes

BVI Taxes - British Virgin Islands Taxation Benefits

The British Virgin Islands tax rate and BVI Taxes are amongst many of the reasons they are a great place to invest in property. The islands are an overseas territory of the United Kingdom and, as such, have close links to the UK and EU, as well as a judicial system based on English law falling under British defence and protection. The country is run by a parliamentary democracy and the currency is based on the US dollar. There are a number of British Virgin Islands taxation benefits to be aware of before buying property here.

The islands are quite safe with low crime and are not overpopulated nor overdeveloped. The current resident population as of 2019 is estimated to be around 32,000.

The BVI economy is one of the most prosperous and stable in the Caribbean, having enjoyed an average GDP growth rate of 9.5% from 2004 up to 2007 and stability even in aftermath of the last 4-year world recession. Estimated GDP was $51,273 (2007 estimate). There is almost no unemployment and the economy is dominated by two main sectors of financial services and tourism – both world-class sailing and land-based villa/hotel rentals.

Above and beyond the stunning natural beauty, the BVI is a tax haven and has highly attractive tax benefits. The British Virgin Islands’ tax system is most notable for what is not subject to taxation. In fact, the BVI tax laws are so much simpler than those of North America that you would need only about 200 pages of paper to print them out in their entirety!

British Virgin Islands taxation is as follows:

  • No capital gains tax
  • No gift tax
  • No sales tax or value-added tax
  • No profit tax
  • No corporation tax
  • No inheritance tax or estate duty
  • 0% income tax (income tax was reduced to zero when the payroll tax was introduced. The payroll tax varies between 10%-14% of total payroll paid out).

The BVI has approximately 500,000 international business companies on the register as of 2012.  Principal activities include corporate domicile, trust and estate planning, mutual funds administration and management and captive insurance companies. The territory now has the second-highest value for land in the Caribbean and 2009 property prices have remained relatively stable in the residential sector, despite the worldwide downturn impacting property prices elsewhere.

BVI Taxes - Income Tax

The absence of most major forms of taxation in the territory has led to the country being included on lists of top tax protectorates, although the jurisdiction prefers to style itself as a modern offshore financial centre. There are a number of forms of taxation and revenue collection in the British Virgin Islands, but the majority of the revenues the government collects are from annual license fees for offshore companies incorporated in the BVI.

BVI Taxes - Payroll Taxes

In 2005 the British Virgin Islands introduced a payroll tax which broadly encompasses partners, boards of directors, and stockholders of a company who are actively involved in running the business and are not solely passive investors within the territory.

The payroll tax depends on the size of the business. The current rates are 14% for larger companies and 10% for small businesses defined as a Class 1 Employer (having a payroll of less than $150,000 USD, a turnover of less than $300,000 USD, and fewer than seven employees or “deemed employees” in total).

The first $10,000 USD of remuneration is free from any payroll tax. Of the total remuneration, 8% is a deduction from the employees; the remainder of the liability is met by the employer.

Stamp Duty

Certain limited transactions in the British Virgin Islands are still subject to stamp duty. The main application of the stamp duty legislation relates to transfers of real estate or transfers of stock/shares in companies that own real estate. The rate of stamp duty on such transactions varies according to the status of the transferee; for Belongers, stamp duty on land transfers is 4%; for Non-Belongers, it is assessed at 12%.

Land Tax and House Tax

Real estate in the British Virgin Islands is subject to nominal taxation. The total tax on residential properties rarely exceeds $1,000 USD per annum.

Customs Duty/ Import Tax

Most imports into the British Virgin Islands are taxed at 5%-20%. Interestingly, reading materials and computer equipment are currently duty-free. See our list:

The basic duty taxes for bringing goods into the British Virgin Islands range from 5% to 20% when importing these items:

  • Vehicles or car body parts 20%
  • Electronic components 20%
  • Cell phones 20%
  • Video games 20%
  • DVDs and CDs 15%
  • Car engine parts 15%
  • Household goods, furniture, and bedding 15%
  • Clothing and shoes 10%
  • Plastics 10%
  • Tools 10%
  • Marine parts 5%
  • Digital cameras 5%

Computers and reading materials are currently duty-free.

EU (European Union) Withholding Tax

In common with most British overseas territories, the BVI had the EU withholding tax imposed upon it in relation to interest payments in the jurisdiction which are payable to natural persons who are residents within the EU.

The withholding tax is not mandatory. Depositors can elect not to pay it by agreeing to full disclosure of their account information to the revenue authorities in their country of residence. The implication is that the withholding tax is applied only to those who are not properly declaring their income in their home countries.

However, it should be noted that payment of the withholding tax does not exempt the income from any applicable income taxes in the home jurisdiction. There is no double-taxation relief under the relevant legislation.

Miscellaneous Taxes

The British Virgin Islands has a number of minor taxes, imposts, and levies. These include:

  • Self-driven Vehicles Tax, usually included in the rental rate
  • Hotel Accommodation Tax, 7% of the rental rate, and
  • Cruising Permits Tax, for charterers (characterized as a permit), $0.75-$4.00 USD per day.

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BVI Taxes