After consultations with the business lobby, the government of the British Virgin Islands has announced a modification of the proposed payroll tax in an attempt to ease the burden on small firms.
As a result of international pressure, BVI’s dual taxation system will be abolished, meaning that from 1st January the 15% corporate tax will be eliminated for local businesses and the current income tax system for employees will also disappear.
In its place, the government originally proposed a new payroll tax to be levied at a rate of 16%, half of which will be paid by the employer and the other half by the employee, with the first $7,500 of income exempted.
However, under new changes, the contribution for small business, defined as those employing less than seven people and with a payroll of less than $150,000 per year, has been reduced to 2%, whilst all other businesses will contribute 6%. The 8% contribution level for each employee remains unchanged.
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