Establishing a BVI company: application procedures, fees, and advantages

Small and medium-sized businesses (SMEs) often choose to set up companies in the British Virgin Islands (BVI) due to the absence of taxes, an uncomplicated corporate governance, and strict confidentiality measures. This article offers an in-depth analysis for businesses from Hong Kong into the advantages of forming a BVI company, the requirements, the necessary documentation, associated costs, and effective financial management tactics. Also, you will also learn how businesses can streamline cross-border payments and financial management through Airwallex, an all-in-one financial platform.

What is a BVI company?

The British Virgin Islands is a British Overseas Territory located in the Caribbean and a member of the Commonwealth. Its legal framework is based on English common law. The BVI has become a popular destination for offshore company registration because of its favourable tax policies and robust privacy safeguards. Unlike local companies registered in Hong Kong, BVI companies are not subject to Hong Kong’s Companies Ordinance and only need to comply with the tax and legal requirements of their own jurisdiction.

BVI companies are commonly utilised for international trade, asset protection, and tax optimisation. They can be established in various forms, including limited liability companies (LLCs), joint-stock companies, or other business structures.

Types of BVI companies

According to the BVI Business Companies Act, five main categories of offshore companies can be formed in the British Virgin Islands:

1. Limited by shares: The most common type of company where shareholders are liable only up to the amount they have invested in their shares.

2. Company limited by guarantee (without shares): Shareholders are liable only up to the amount they have guaranteed.

3. Company limited by guarantee (with shares): Shareholders’ liability includes their guaranteed amount. They are also permitted to issue shares.

4. Unlimited company (without shares): Shareholders bear unlimited liability for the company’s debts

5. Unlimited company (with shares): Shareholders bear unlimited liability for the company’s debts but are also permitted to issue shares.

Typically, limited by shares companies are generally favoured for commercial activities, while guarantee companies are more suitable for non-profit entities.

Advantages of BVI companies in cross-border investment and asset management

Establishing a company in the BVI offers multiple benefits for cross-border investment and asset management. First, since the BVI’s zero-tax environment allows companies to avoid income tax and capital gains tax, businesses can significantly reduce their tax expenses. Also, there is no requirement for registered capital, and companies can open bank accounts worldwide easily. This facilitates cross-border investments.

Besides, a BVI company provides robust asset protection. The identities of shareholders and directors remain confidential. Businesses can confidently allocate assets and make investment decisions without concerns about personal information being revealed. However, starting 2 January, 2025, the BVI government has implemented an amendment to mandate companies to gather, maintain, and report information on beneficial owners to the BVI Registry of Corporate Affairs. Nevertheless, ‌details concerning beneficial owners and shareholder registers will remain private.

How can a BVI company help businesses reduce costs?

The primary tax benefit of a BVI company lies in its zero-tax regime. This indicates that companies are exempt from paying profits tax as well as taxes related to business shares, debt instruments, other other securities, including estate or inheritance taxes. While operating within the BVI jurisdiction, businesses are not subject to any tax on profits. This significantly reduces their operational expenses. As a result, many businesses choose to establish BVI companies to minimise various tax liabilities.

However, if a BVI company conducts business activities in Hong Kong, it must abide by the same reporting requirements as companies based in Hong Kong. This includes registering with the Business Registration Office of the Inland Revenue Department and submitting profits tax returns.

Requirements and documentation for registering an overseas company

To register a BVI overseas company, there should be at least one shareholder and one director, both of whom must be at least 18 years old. There should also be an agent who is either a local individual or a corporate entity in the BVI. A standard registered share capital of 50,000 shares and a company name in both English and Chinese will be required as well. 

The documents required to establish a BVI company include but are not limited to:

• The company’s name and its registered correspondence address;

• Proof of identity and residential address for both shareholders and directors;

• The company articles of association, memorandum of association, and details on share allocation;

• Details of the business nature, operational areas and sources of shareholder funds.

Steps to establish a BVI company

Setting up a company in the British Virgin Islands (BVI) is straightforward, provided that the following procedures are followed:

1. Appoint a registered agent recognised in the BVI;

2. Select a company name and confirm its availability;

3. Prepare the required documentation

4. Submit the application to the local registration authority;

5. After receiving approval, open a bank account for the company’s operational needs;

6. Ensure compliance with local regulations, including annual reporting and financial audits.

Fees involved in BVI company registration

Registering a BVI company has to be conducted through a recognised BVI agent, for which the estimated total cost is HK$13,000, including but not limited to the following services:

• First-year registration fee

• Company name search

• Document submission

• A full set of company registration documents

Streamlining cross-border payments and financial management for BVI companies with Airwallex

For BVI company finance managers and business owners, Airwallex offers a comprehensive suite of financial tools designed to streamline and optimise day-to-day operations. Opening an Airwallex Business Account is a straightforward and efficient process, taking just a few minutes and requiring no account opening fees or minimum balance. This makes it an accessible solution for businesses of all sizes.

With a single Airwallex Business Account, BVI companies can create Global Accounts in over 23 different currencies, including USD, GBP, and HKD, all under the company’s name. Each Global Account comes with local bank details, branch codes, and unique account numbers. This multi-currency capability allows businesses to use the collected funds directly to pay employees and suppliers, eliminating the extra costs and complexities associated with forced foreign exchange.

Airwallex’s cross-border transfer services further enhance the company’s global reach, covering over 150 countries in more than 60 currencies. These transfers are fast and cost-effective, with 90% of transactions arriving on the same day. There are no minimum transaction amounts, and the exchange rates offered are highly competitive, ensuring that businesses can manage their international payments efficiently and cost-effectively.

Moreover, the Expense Management tools provide finance managers and business owners with the transparency and control they need to manage global business expenses. These tools facilitate the tracking and management of cross-border transactions, making the entire financial process more user-friendly and efficient. By leveraging Airwallex, BVI companies can enhance their operational efficiency, reduce administrative burdens, and focus on growing their business.

Frequently asked questions

1. What are the benefits of setting up a BVI company?

BVI companies can operate in a low-tax environment that enables businesses to reduce tax expense. They also have no capital requirements for incorporation, allowing businesses to open bank accounts worldwide for cross-border investments. BVI companies also enjoy increased confidentiality of information.

2. What are the legal requirements for establishing a BVI company?

Businesses must submit proof of identity for both shareholders and directors, along with constitutional documents that comply with local legal regulations.

3. Are BVI companies subject to local taxes?

BVI companies that operate within the BVI are not obligated to pay taxes on their profits. They are also exempt from estate taxes, inheritance taxes, and taxes on shares, debts, or other securities, hence, legally reducing multiple tax liabilities.

4. Which is more suitable for SMEs – a BVI company or a local company?

The decision depends on your business needs. If tax benefits and confidentiality are priorities, a BVI company may be the better choice. If your focus is on the local market or business operations in Hong Kong, registering as a local company in Hong Kong would be recommended.

5. How can Airwallex help BVI companies in managing their finance operations and payment needs?

Airwallex enables companies to open multi-currency accounts in their name and provides competitive exchange rates for transfers. This streamlines cross-border payment processes and is ideal for BVI companies engaged in international trade.

Sources:

The information regarding the establishment of BVI companies was sourced from official references as of February 2025. For the latest details, please refer to the official BVI websites:

1. https://www.bvifsc.vg/products-services/corporate-structures 

2. https://www.ird.gov.hk/eng/pdf/faqciohk.pdf