One of the most frequent questions we receive from our clients is whether there is a requirement for the BVI International Business Companies to prepare and submit Financial Statements or whether an audit of the Financial Statements is required. Below we analyze the current requirements for BVI International Business Companies, as well as the recent amendments to the BVI Business Companies Act.
Current requirements
BVI companies are governed by the BVI Business Companies Act (the act). Article 98 of The Act is titled ‘Records and underlying documentation’. Under this article the act describes that each BVI Company needs to keep within, or outside of the BVI, at an address known by its Registered Agent, any records and underlying documentation to support its transactions. Such documentation can be invoices, agreements, bank statements and any other document of accounting significance. These documents need to be kept for a period of 5 years from the date of the completion of the transaction they relate to.
In light of the above, as at the date of this article, the act does not require BVI companies to prepare and submit financial statements, nor to perform audits of the financial statements, unless a regulated or licensed company. More information on financial records requirements and article 98 described above can be found in our article here.
Future requirements
During August 2022, the BVI Business Companies Act has been amended to require all BVI Companies (limited exceptions apply) to submit an annual Financial Return to their Registered Agent.
The contents of the financial return have not been released yet, but it is expected that it will require companies to submit a simple Profit and Loss and Balance Sheet and it will not need to be audited. More developments on this are expected.
Its worth emphasizing that the Financial Return will need to be submitted to the Registered Agent of the company, who will have an obligation to submit the names of the Companies who did not proceed with their submissions to the Registrar and fines will be imposed on Companies who do not fulfil this requirement. As the amendment currently stands the Financial Return will not be submitted to the BVI Registrar of Companies.
This requirement will come into force on 1 January 2023. It is expected that the first year for which Companies will be required to submit their Financial Return will be for 2023, therefore the first submissions are expected during 2024. The submission will need to take place maximum 9 months after the financial year end of the BVI Company.
Please note that this regulation is still under development and we expect some changes until is finalized. More information on the above amendments can be found in our detailed article here.
Audited Financial Statements
As described above, audits of financial statements are not required in the BVI unless a regulated entity (certain exemptions apply). In that respect, if you have a simple BVI Co audits are not required.
Tax Returns requirement
BVI is a tax neutral jurisdiction, which means that there are no taxes, no capital gains tax etc. In that respect, there is no requirement for submission of tax returns or tax filings. Please bear in mind that you will need to check any tax requirements which may occur from your holding of a BVI Company in your country of domicile.
Conclusion
BVI is one of the most popular offshore jurisdictions in the world. There are a lot of reasons feeding to the success of the jurisdiction, and one of them is the requirements in terms of accounting and financial statement submissions contrary to other jurisdictions.
If you need any assistance on Accounting and Financial Statements preparation, this is what we specialize on and we would be happy to assist. Contact us now for more information.
