The British Virgin Islands is perhaps the most famous offshore in the world so-called “classic offshore”. Despite the introduction of compulsory registry of beneficiaries, buying a company in the British Virgin Islands is still popular. Companies registered in the British Virgin Islands have no obligation to file financial statements with the state authorities. In addition, it is not required to prepare and file income tax returns. However, under the legislation on controlled foreign companies (CFCs) adopted in the Russian Federation, the controlling persons of such companies are obliged to report to the Russian tax inspectorate (provided they are tax residents of the Russian Federation).
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All business companies registered in the BVI should keep accounting records in such form and volume that may reflect the company’s activity and truthfully show financial status of the company.
BVI Business Company’s Act provides minimum obligations for submission of any statements and returns. Commercial companies registered in the BVI are not required to file financial statements, annual reports or other types of reports with the BVI government authorities. The exemption is made for private, professional and public funds and other licensed structures.
Under the law the companies are obliged to keep accounting records and attesting documents for 5 years starting from the date of relevant transaction. All documents supporting company’s activity should be kept at the office of the company’s registered agent or at any other place (on the territory of the BVI or outside it) determined by the directors of the company.
If the records are kept with the registered agent, no further action is required. If the records are not kept with the registered agent, the companies serviced by the registered agent must notify the registered agent in writing (including by email) of the location where the accounting records are kept.
If the records are maintained exclusively electronically, the location of the server on which they are maintained is sufficient for purposes of meeting these requirements; if they are maintained on a virtual server, the location of the primary access points to those records.
The notion of storing "accounting records" implies that such records:
The retention of general information, such as accounting policies, is not sufficient to meet these requirements.
As of January 1, 2023, commercial companies are required to file an annual financial return (Annual Financial Return) with their registered agent in the BVI - within 9 months of the end of the fiscal year to which the return relates. Accordingly, the first reports must be filed by September 30, 2024.
The registered agent must, on request from the British Virgin Islands Financial Services Commission (BVI FSC) or other competent authority, provide a copy of the financial statement of the company for which the request is made. In addition, the registered agent must notify the FSC if the company report is not received - no later than 30 days after the date of delay (i.e. if the report is not received by 30 September, the registered agent must notify the FSC by 30 October).
As a general rule companies don’t have a liability to undertake financial audit and to submit audited accounts to state authorities. Financial statements cannot be publically accessed.
However under the Securities and Investment Business Act, 2010 («SIBA») and Mutual Funds Act («Funds») all private, professional and public funds, as well as all licensed organizations («Licensees»), must appoint an auditor and prepare an audit of their financial statements, unless explicitly exempted from this requirement.
All funds and licensees must submit audited financial statements to the BVI Financial Services Commission during 6 months from the end of the fiscal year.
Under the new rules, for-profit companies must file reports with their registered agents within 9 months of the end of the fiscal year.
If a company does not comply with law requirements to keep accounting records and attesting documents a penalty in amount of 50 000 USD will be imposed.
In cases a company does not provide accounting records and documents on international request which is made according to one of the agreements on exchange of tax information set by the BVI the penalty increases to 100 000 USD.
In addition to the fine, the law also provides for imprisonment for the period up to 5 years.
Failure to comply with the new obligation to prepare and submit an annual report with financial indicators may result in penalties of up to USD 5 000 and even removal of the company from the Registry. There is also provision for liability of registered agents who will not fulfill their obligations with respect to collection and storage of such reports.
There are no requirements to prepare consolidated financial statements.
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