The British Virgin Islands (BVI) has made amendments to the Business Companies Act and Business Companies Regulations, which came into effect on January 1, 2023. These changes include the introduction of Article 98(a), which requires BVI International Business Companies to prepare and submit a Financial Annual Return (FAR).
In addition to keeping records and documents that enable the financial position of the company to be determined with reasonable accuracy, a BVI company must now also file an annual return containing certain prescribed financial information with its registered agent. The FAR is due for financial periods starting on January 1, 2023, or later, and must be filed within nine months after the end of the company’s financial/fiscal year to which the annual return relates.
It is important to note that the FAR will not be filed with the Registrar or be publicly available, and there is no requirement for the financial information included in an annual return to be audited or certified by a Public Accountant. Additionally, there are no prescribed accounting policies or principles that need to be followed, and any currency may be used for the FAR.
Companies that are exempt from this requirement include public companies whose shares are listed on a recognized stock exchange, companies regulated under BVI financial services legislation and already providing financial statements to the BVI Financial Services Commission, and companies that already file their annual tax return with the BVI tax authority. Companies in liquidation are also exempted from this requirement, provided the FAR was not already due prior to the commencement of the liquidation.
Penalties will be imposed for late filing of the FAR, with the penalty increasing each month up to a maximum of $5,000. BVI companies are advised to keep collecting their financial records, such as invoices, agreements, receipts, bank statements, and more, to be available when the time comes for the preparation and submission.
The BVI government is developing a portal that will be used to submit the FAR. Their specialized team will also assist with the accounting work required and the preparation and submission of the FAR on behalf of the companies for clients who wish to do so. Clients are advised to consider whether their financial records are in good order and sufficiently detailed to produce the required information.
The BVI government enacted this amendment to its legislation to maintain its commitment to the development and maintenance of the highest standards of economic and financial propriety. The FAR requirement is designed to ensure that BVI company legislation complies with international standards and best practices as a leading financial center.
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