The British Virgin Islands have been a top destination for investors for many decades. As a legal regime that is based on English corporate and common law, the BVI has attracted foreign investment with its modern, flexible and tax friendly economic policies.
Through the years, the BVI has proven itself to be a dependable jurisdiction worthy of investor confidence. The exemption of corporations from income and corporate tax, and the absence of capital gains tax on companies incorporated under BVI business companies’ legislation has continued to attract investment despite the recent economic recession. Recent numbers such as a 37% increase in company incorporations in the first quarter of 2012 prove that business is not just surviving the economic woes, but thriving. There are over 468,000 total number of companies incorporated in the BVI, and over 2,600 funds domiciled.
It is important for the BVI to continue to attract international investment because the impending start of the EU Directive on Alternative Investment Fund Managers on July 2013 makes it possible that jurisdictions such as Dublin, Malta and Luxembourg will begin to attract investors away from the BVI. The AIFM Directive would put hedge and private equity funds under the supervision of an EU regulatory body. The BVI’s adherence to global regulations and international tax laws needs to be clearly demonstrated in order for investors to see the benefits of continuing to use BVI domiciled funds and managers.
Recent events have shown that the BVI is prepared to continue being a preferred foreign investment jurisdiction. The BVI’s reputation was proven again in 2011 when the Financial Stability Board praised and supported the BVI’s work in adherence to global regulations and standards on international cooperation and information exchange. Additionally, the Organization of Economic Corporation and Development approved the BVI’s regulatory and legal framework. The BVI has proven its compliance with international standards on tax transparency and information sharing by having signed over twenty Tax Information Exchange Agreements.
BVI’s history as an established offshore financial center as well as the recent praise from the FSB and OECD will help maintain it as a one of the leading jurisdictions for structuring investment funds and investment managers.