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BVI Aircraft Registry Given A New Lease Of Life

by Amanda Banks, Tax-News.com, London

12 November 2012


New legislation in the British Virgin Islands (BVI) - the Mortgaging of Aircraft and Aircraft Engines Act, 2011, and the Mortgaging of Aircraft and Aircraft Engines Regulations, 2012, has entered into force, and will support the expansion of the island's aircraft registry by enabling locally-registered operators to secure aircraft financing.

The laws will enable aircraft operators to register ownership of aircraft and aircraft engines in the British Virgin Islands under three separate registries, for aircraft, their engines, and their mortgages. Lending institutions require that entities demonstrate legal ownership of assets before providing financing, to achieve legal certainty that they may retain a debtor's assets in the case of a credit default. The new law will enable local operators to register ownership of aircraft and aircraft engines unlocking credit opportunities for fleet expansion.

While the British Virgin Islands has been operating in the aviation sphere for several decades, the territory until lately has been known only as an tax-efficient aircraft holding company domicile, and less than a handful of aircraft have been registered with the islands' Aircraft Register.

However, last year the government progressed plans to develop the local registry, and in June 2011 the aforementioned legislation was approved by the jurisdiction's legislative assembly, in recognition that in order to secure business from international operators the islands needed a supportive regulatory environment. The government anticipates that following the entry into force of the legislation, on October 15, 2012, the islands will be able to leverage its position as a holding company domicile to lure international operators to register their aircraft and engines in the BVI. Similar legislation has long been in place in Bermuda and the Cayman Islands.

Law firm Harney's commented: "The new law complements the jurisdiction’s status as a US Federal Aviation Authority Category One aircraft register under the International Aviation Safety Assessment programme by creating a framework for registration in the British Virgin Islands of security over aircraft, and separately, aircraft engines."

"Lenders in particular will be comforted by provision in the legislation for the filing of priority notices (which reserve and protect a particular priority position for a prospective mortgagee, for fourteen days), and clear provisions on enforcement, transfer, transmission... and discharge of mortgages. This development paves the way for new business opportunities which complement and support the British Virgin Islands’ position as the premier offshore corporate domicile with over 850,000 companies incorporated to date."

TAGS: holding company | law | aviation | Virgin Islands | offshore | legislation | British Virgin Islands | services

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