British Virgin Islands Personal Taxation

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The BVI, like other British 'dependent territories', was forced to apply the EU's Savings Tax Directive from 1st July, 2005, and chose to apply a withholding tax (initially of 15%, rising to 20% from 1st July, 2008, and to 35% in 2011) to the returns on savings paid to nationals of EU Member States. The Directive does not apply to corporate entities.

British Virgin Islands Residence and Liability for Taxation

For tax purposes, residence is defined as presence in the country for more than six months of a year. Individuals in the BVI pay income tax, land and housing taxes; there is no capital gains tax, wealth tax, inheritance or gift taxes, sales tax or VAT. Stamp duty is payable on some transactions.

British Virgin Islands Income tax

NB Income tax was abolished in 2006; see below.

Until 2006, resident individuals paid income tax on their world-wide earnings. Foreign taxes paid were allowed as tax credits for those countries with which the BVI has Double Tax Treaties, and in the case of some other countries. Non-resident individuals paid income tax on their income arising in or remitted to the BVI.

Persons investing in hotel construction and some other enterprises for which the BVI has a special need could obtain tax holidays for the resulting profits.

In 2004, the government announced that income tax for both companies and individuals would be abolished with effect from 2005, with the introduction of a payroll tax.

In January, 2005, the Legislative Council approved the new payroll tax.

The new payroll tax is levied at a rate of 14%, 8% of which is paid by the employer and the remainder by the employee, although the first $10,000 of income is tax free. The contribution for small business, defined as those employing less than seven people and with a payroll of less than $150,000 per year, is 10%.

British Virgin Islands Real Estate Taxes

Virgin Islanders pay $10 per year on the first acre of land or part-acre, and $3 on each additional acre. Expatriates pay $150 per year on the first acre or part-acre, and $50 on each additional acre.

House tax is charged annually on all privately-owned buildings at the rate of 1.5% of assessed value.

There is a 12% stamp duty on real estate transactions.

British Virgin Islands Custom Duties

Customs Duties are imposed on most imports, at rates between 5% and 20%. Materials imported for hotel construction, and capital goods imported for enterprises which are deemed to be of special value to the BVI are exempt from import duties. If the BVI joins a wider Caribbean single-market zone, which now seems likely, the loss of tariff revenues will force the government into wholesale tax reform, with a sales tax seeming inevitable.

BRITISH VIRGIN ISLANDS: PERSONAL TAXATION

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British Virgin Islands Residence and Liability for Taxation

British Virgin Islands Income tax

British Virgin Islands Real Estate Taxes

British Virgin Islands Custom Duties