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British Virgin Islands: Domestic Corporate Taxation

Introduction

This page was last updated on 19 May 2021.

There is no capital gains, capital transfer tax, inheritance tax, sales tax or VAT in the British Virgin Islands. There are property taxes and stamp duties on certain transactions.

In October 2004 former Chief Minister Orlando Smith informed the country's Legislative Council that a two-year transition period would be put in place to smooth the changeover to the Business Companies Act, which has lowered the income tax rate to 0% for both local and International Business Companies.

The new legislation, which took effect on 1st January 2005, was drafted to ensure the territory is fully compliant with the European Union (EU) Savings Tax Directive and EU Code of Conduct on Business Taxation, as required by the United Kingdom of all its Overseas Territories.

Under the transition arrangements announced by Dr Smith, new incorporations were still possible under old legislation throughout 2005. From 2006, new incorporations were made under the new Business Companies Act, although companies already on the register were permitted to operate under the old IBC Act or Companies Act for an additional year. Since 1st January 2007, all companies are operating under the new legislation.

Under the new legislation, the existing income tax system for employees disappeared. However, in its place, a 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 US$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 US$150,000 per year, is 10%.

 

 

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