As part of the kick-off of the submissions of the BVI Annual Return and as it is our mission to provide you with as much information, guidance and support on this new requirement, please see below a wide range of questions and answers on the BVI Annual Financial Return requirement, as first presented on our dedicated website on annual returns, the www.annualreturn.vg.
BVI Annual Return Q&As:
What is the BVI Annual Financial Return?
Further to the BVI Business Companies Act amendments 2022, from 1 January 2023 every BVI Company needs to submit an Annual Financial Return to its Registered Agent.
The Annual Return template consists of a simple Income Statement and Balance Sheet and will not need to be audited. You can see the actual template in our section above.
What is the deadline for submitting the Annual Return? (examples included)
By virtue of section 98A(7) of the Act, the reference to “year” relates to a company’s fiscal or financial year which may be a calendar year. If a company’s fiscal or financial year does not correspond to a calendar year, the reference to “year” relates to the company’s stated fiscal or financial year. Thus, the requirement to file an annual return relates to the company’s fiscal or financial year, however that is determined and applied by the company.
The earliest date an annual return becomes due (as opposed to when it must be filed) from a company is 1st January 2024, considering that section 98A of the Act and this Order came into effect on 1st January, 2023.
Therefore if a Company has a Financial Year End 31 December then its Annual Return becomes due for submission on 1 January the following year. It then has 9 months (i.e. until 30 September) to submit its Annual Return to its Registered Agent. As an example, a Company with Financial Year end 31 December 2023 has until 30 September 2024 to submit its Annual Return to its Registered Agent.
If a company has a fiscal or financial year that does not correspond to a calendar year, its annual return becomes due in 2024, depending on the month in which the commencement of its financial year falls. However, it may have until any period in 2025 to file its first annual return. For example, Company A’s fiscal or financial year is from March to February. For the purposes of complying with its annual return filing under the Act, Company A’s first annual return becomes due on 1st March 2024, but it has until 30th November 2024 to file the annual return.
If, on the other hand, Company A’s fiscal or financial year is from May to April, its first annual return becomes due on 1st May 2024, but the Company has until 31st January 2025 to file the annual return.
Will there be penalties for non-submission of the annual return?
The annual return is to be filed with the company’s registered agent nine months after the end of the year to which the annual return relates. The registered agent will then have an obligation to inform the BVI Financial Services Commission, 1 month after the due date, on the Companies which did not fulfil this requirement.
Failure by a company to file its annual return constitutes an offence and may result in fines and the Company not be deemed as in good standing or even result in the name of the Company been struck-off the Register by the Registrar.
Which BVI Companies are exempted from preparing an Annual Return?
The companies exempted from filing under section 98A(5) of the Act are the following:
- a listed company, meaning a company that is listed on a stock exchange;
- a company that is regulated under a financial services legislation and provides financial statements to the Commission in accordance with the requirements of that financial services legislation;
- a company that files its annual tax return to the Inland Revenue Department accompanied by the company’s financial statements; and
- a company in liquidation, except that this exemption does not apply if the company’s annual return becomes due prior to the commencement of the liquidation.
What about Companies in liquidation?
For companies already in liquidation, annual returns are not required to be prepared for any financial periods in which the company is in liquidation. Returns must however be filed in respect of all financial years prior to the commencement of the liquidation.
Privacy of Filed Annual Returns
As the annual returns are filed with the registered agent, the details of such remain confidential and within the custody of the agent, who must make the information available whenever requested pursuant to an obligation under an enactment. For example, the BVI Financial Service Commission may request the information in accordance with the powers granted to it under the Financial Services Commission Act, 2001; such would also be the case with regard to a request by the International Tax Authority under the Mutual Legal Assistance (Tax Matters) Act, 2003, the Financial Investigation Agency under the Financial Investigation Agency Act, 2003 and the Attorney General under the Criminal Justice (International Co-operation) Act, 1993.
Implications of Failure to File
Where a company fails to file its annual return within the nine (9) months allotted, such company will have failed the test of good standing in accordance with section 235 of the Act. The company will also become subject to penalty fees as outlined in Schedule I, Part II of the Act, and risk subsequent striking off the register and dissolution in accordance with section 213 of the Act.
How to determine Financial Year-End
In determining the due date, one should refer to the specific company’s fiscal or financial year-end.
Where a company’s year-end was not previously determined or would be impacted by a desired change to the year-end, such a decision should be recorded by the usual board resolution.
Which currency can be used for completion of the Return?
The reference in the Schedule to the denomination “US$” (the USA currency) may be substituted by any other currency in which a company prepares its financial statements.
Which accounting standard(s) can be used to complete the return?
There is no specific reporting standard prescribed in completing the return.
We at Asterisk BVI prepare our accounting records and annual returns in accordance with the International Financial Reporting Standards (IFRS), as they are widely known and used, and also accepted in the BVI.
Does the Annual Return need to be audited?
No, the BVI Business Companies Act does not prescribe that the Annual Return needs to be audited.
Where I can find a copy of the legislation?
The Annual Return Requirement is governed by Section 98A of the BVI Business Companies Act, 2022 amendments. You can find the full text on the BVI Financial Services Commission here. Please note that this version may have had subsequent revisions, therefore we suggest to check the BVI Financial Services Commission for further updates.
Where can I see the official Annual Return template as released by the authorities?
Please see here the official Financial Return Order as released by the BVI Financial Services Commission during March 2023 which includes the Annual Return template on pages 4 and 5.
What happens if you dont file on time?
Where a company fails to file its return on time, the Registered Agent of the said Co has obligation 30 days after the annual return was due to notify the Registrar in writing of that fact by stating:
(a) the name of the company;
(b) the year to which the annual return relates; and
(c) the last time the company filed its annual return.
What are Financial Records?
The BVI Business Companies Act par. 98 states that all BVI Companies need to keep Financial Records and underlying documentation, which can be kept at any place around the world, but the Record-Keeping Address and Record Keeper need to be known by the Registered Agent of the Company. The documents need to be kept for a period of 5 years from the date of the transaction they relate to.
Financial Records can be any document which ‘explains’ the Financial Transactions of the Company. Such records may be but are not limited to Invoices, Bank Statements, Agreements, and any other document of accounting significance.
This requirement is in addition to the Annual Return submission requirement, therefore please bear in mind to keep proper Financial Records for your BVI Company at all times.
What is a Profit & Loss
A profit and loss (P&L) statement under International Financial Reporting Standards (IFRS) is a financial statement that provides information about a company’s revenues, expenses, gains, and losses over a specific period. It is also known as an income statement or statement of operations. The P&L statement is used to measure a company’s financial performance and to determine its net income or loss for the reporting period. It shows how much revenue a company generated and how much it spent to generate that revenue, providing investors and analysts with important insights into the company’s profitability.
What is a Balance Sheet
A balance sheet under International Financial Reporting Standards (IFRS) is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It shows a company’s assets, liabilities, and equity, and provides investors and analysts with important insights into a company’s financial health. The balance sheet follows the fundamental accounting equation, which states that assets must always equal the sum of liabilities and equity. The balance sheet is an essential financial statement for decision-making and is used by investors, creditors, and other stakeholders to evaluate a company’s ability to meet its financial obligations and to assess its long-term financial health.
Where I can read more?
We have prepared for you through our constant analysis and research on the new regulation a range of articles to assist you in obtaining a full understanding of the new requirement. You can read more below:
- BVI Annual Return – Everything You Need To Know – 2024 Update
- BVI Annual Return Submissions Commence: January 1, 2024 Kickoff
- A copy of the actual return template to be submitted
- Understanding the contents and form of the BVI Annual Return Template
- 6 Reasons why the BVI Annual Return requirement shouldn’t stress you out
- BVI Annual Returns: Exemptions and Privacy
Summary of important things to know:
- BVI Business Companies will need to submit an Annual Return (income statement and balance sheet) to their Registered Agent;
- There will be exemptions to this requirement but very limited (see above);
- If your company’s financial year is the calendar year, then your first submission will need to be done until 30 September 2024;
- No audit is required, unless you wish for your own purposes;
- You can use the currency in which your company prepares its financial statements;
- There will be penalties for late submission;
- All information you need and the template can be found above.
Our accounting teams specialize on BVI Annual Returns as we are monitoring the legislation changes for some time now and are ready to assist you with preparation of accounting records and annual returns. You can contact us at contact@bviaccountants.com for more information on how we can assist.
