BVI Leader Proposes Two-Year Transition Towards New Business Companies Act

by Amanda Banks, Tax-News.com, London

26 October 2004

Chief Minister of the British Virgin Islands, Dr. D. Orlando Smith, has informed the country’s Legislative Council that a two-year transition period will be put in place to smooth the changeover to the proposed new Business Companies Act.

The new legislation, expected to take effect on 1st January 2005, has been drafted to ensure the territory is fully compliant with the European Union (EU) Savings Tax Directive and EU Code of Conduct on Business Taxation, as required by the United Kingdom of all its Overseas Territories, and will lower the income tax rate to 0% for both local and International Business Companies.

However, under the transition arrangements announced by Dr Smith, new incorporations will still be possible under old legislation throughout 2005. Then, in 2006, new incorporations must be made under the new Business Companies Act, although companies already on the register will be permitted to operate under the old IBC Act or Companies Act for an additional year. By 1st January 2007, it is expected that all companies will operate under the new legislation.

The Act will require companies to use a registered agent to ensure compliance with the new laws, and the government intends to launch an educational initiative to raise awareness of the impending changes.

Speaking on the merits of the proposed legislation, Dr Smith noted: “The new BVI Business Companies Act was designed to safeguard the attributes that have made the BVI the world’s premier offshore company domicile.”

Comments to the Financial Services Commission are invited from the industry on the final complexion of the legislation, which is expected to be introduced by 17th December.

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