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) 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.
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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.
The
rates of income tax, which was charged on gross
income, were as follows:
| Income
Band |
Rate
of Tax, % |
| nil
to $3,000 |
nil |
| $3,001
to $7,500 |
6 |
| $7,501
to $15,000 |
10 |
| $15,001
to $22,500 |
15 |
| over
$22,500 |
20 |
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
July,
2002, Chief Minister Ralph T. O'Neal announced
that the government planned to abolish personal
income tax on the Islands by 2004. In its budget
for 2004, the newly-elected government merely
increased the bottom band for zero taxation
to $7,500, abolishing the 6% tax rate.
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.
Payroll
tax rates for employees in the BVI are currently
set at 8%, although the first $10,000 is exempt.
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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.
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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.
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