1 Connection Factors
1.1 To what extent is domicile or habitual residence relevant in determining liability to taxation in your jurisdiction?
There is currently no form of direct taxation in the British Virgin Islands (save for that specified in question 2.3).
1.2 If domicile or habitual residence is relevant, how is it defined for taxation purposes?
This is not applicable (see question 1.1).
1.3 To what extent is residence relevant in determining liability to taxation in your jurisdiction?
There is currently no form of direct taxation in the British Virgin Islands (save for that specified in question 2.3).
1.4 If residence is relevant, how is it defined for taxation purposes?
This is not applicable (see question 1.3).
1.5 To what extent is nationality relevant in determining liability to taxation in your jurisdiction?
There is currently no form of direct taxation in the British Virgin Islands (save for that specified in question 2.3).
1.6 If nationality is relevant, how is it defined for taxation purposes?
This is not applicable (see question 1.5).
1.7 What other connecting factors (if any) are relevant in determining a person's liability to tax in your jurisdiction?
There is currently no form of direct taxation in the British Virgin Islands (save for that specified in question 2.3)
1.8 Have the definitions or requirements in relation to any connecting factors been amended to take account of involuntary presence in (or absence from) your jurisdiction as a result of the coronavirus pandemic?
This is not applicable (see question 1.7).
2 General Taxation Regime
2.1 What gift, estate or wealth taxes apply that are relevant to persons becoming established in your jurisdiction?
There are currently no gift, estate or wealth taxes in the British Virgin Islands. However, there is a stamp duty of US$5 payable on the transfer of land as a gift of natural love and affection to a 'Belonger' in the British Virgin Islands executed prior to 7 May 2020 or after 31 May 2021.
2.2 How and to what extent are persons who become established in your jurisdiction liable to income and capital gains tax?
There are currently no income or capital gains taxes in the British Virgin Islands.
2.3 What other direct taxes (if any) apply to persons who become established in your jurisdiction?
While there is no income tax in the British Virgin Islands, there is payroll tax and social security imposed on every self-employed person and on employers operating in the British Virgin Islands.
The first US$10,000 of an employee's salary is exempt from tax; however, thereafter, a payroll tax is charged on every Class 1 employer (employers who employ fewer than seven persons) and self-employed persons at a rate of 10 per cent of the employee's annual salary. For Class 2 employers and self-employed persons, the rate charged is 14 per cent of the employee's annual salary. Payroll tax is split between the employer and employee, with up to 8 per cent being deducted from an employee's annual salary and the rest being payable by the employer or self-employed persons. Social security is payable at a rate of 4.5 per cent of the employee's salary by the employer and 4 per cent by the employee. Additionally, both the employer and employee pay contributions towards national health insurance at a rate of 7.5 per cent of the employee's salary split equally between the employer and employee.
2.4 What indirect taxes (sales taxes/VAT and customs & excise duties) apply to persons becoming established in your jurisdiction?
Individuals that reside in the British Virgin Islands will be subject to customs duties on most imported goods. There are a wide range of duty charges on items such as electronics, automobiles, furniture and clothing that range from 5 per cent to 20 per cent of their value. However, there are exemptions on items such as books, computers and construction materials, to encourage investment, rebuilding efforts and infrastructural development within the Territory
In relation to individuals that are becoming established in the British Virgin Islands, there are exemptions on custom duties for the following
- professional equipment and tools of trade for use by the individual;
- personal and used household effects of immigrants to the value of US$1,000 per adult and US$250 per person intending to stay in the British Virgin Islands for a period of more than six months;
- personal effects and baggage of returning residents who have been abroad for no more than 72 hours;
- personal effects and baggage of returning residents who have been outside of the British Virgin Islands for more than 72 hours and purchases and gifts to the value of US$50 for each adult and US$10 for each child; and
- personal effects and baggage compatible with the intended length of stay of tourists and other visitors not intending to stay more than six months.
2.5 Are there any anti-avoidance taxation provisions that apply to the offshore arrangements of persons who have become established in your jurisdiction?
No, there are not.
2.6 Is there any general anti-avoidance or anti-abuse rule to counteract tax advantages?
No, there is not.
2.7 Are there any arrangements in place in your jurisdiction for the disclosure of aggressive tax planning schemes?
No, there are not.
3 Pre-entry Tax Planning
3.1 In your jurisdiction, what pre-entry estate, gift and/ or wealth tax planning can be undertaken?
There is currently no form of estate, gift or wealth tax in the British Virgin Islands.
3.2 In your jurisdiction, what pre-entry income and capital gains tax planning can be undertaken?
There is currently no form of income or capital gains tax in the British Virgin Islands.
3.3 In your jurisdiction, can pre-entry planning be undertaken for any other taxes?
There are currently no other relevant taxes in the British Virgin Islands.
4 Taxation Issues on Inward Investment
4.1 What liabilities are there to tax on the acquisition, holding or disposal of, or receipt of income from investments made by a non-resident in your jurisdiction?
There is currently no form of direct taxation on a non-resident in the British Virgin Islands.
4.2 What taxes are there on the importation of assets into your jurisdiction, including excise taxes?
Customs duties on imports into the British Virgin Islands are subject to a tax within the range of 5 per cent to 20 per cent, depending on the items (computers and reading materials are duty free) and there are exemptions for visitors and residents (as specified in question 2.4).
There is also an exemption on taxes for the importation of assets (personal and household effects) for returning Belongers (as defined in question 10.3) who have not been resident in the British Virgin Islands for a period of three years or more and who intend to permanently reside in the Territory for at least 12 months; including one motor vehicle owned and used abroad for at least 12 months prior to their importation
4.3 Are there any particular tax issues in relation to the purchase of residential properties by non-residents?
Stamp duty is imposed on transactions involving the transfer of land and is payable at a rate of 12 per cent for Non-Belongers (as purchasers) on the price or market value (whichever is higher) of the property. Anti-avoidance rules ensure this also applies to the acquisition of shares in land-owning companies.
The following taxes also apply in relation to the purchase of land and residential properties by Non-Belongers/Non-residents:
- Leasehold Property
Non-Belongers pay 1.5 per cent of the purchase price plus the first 20 years of rent. - Annual Land Tax
Annual land tax for Non-Belongers is US$50 per halfacre or less and US$150 for more than a half-acre but less than an acre. Any additional acre will incur an additional US$50 per year. - House Tax
House tax is also imposed on both categories of individual at a rate of 1.5 per cent of the assessed annual income value of the house per annum).
5 Taxation of Corporate Vehicles
5.1 What is the test for a corporation to be taxable in your jurisdiction?
There is no test as there is currently no form of direct taxation referable to companies or corporations in the British Virgin Islands (save for that specified in question 2.3).
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