The British Virgin Islands are a respected offshore jurisdiction nowadays. You can set up a company here to enjoy a number of benefits and quite a high status of your company in the global business environment. Before you start a company in the BVI, it’s important to check out its economy. In this post, we’ll see what makes its economy tick. As reported on the trustworthy International Wealth portal, the BVI is still a good destination where you can start your business.
BVI: An Overview
The British Virgin Islands comprise 16 inhabited islands (out of 30 islands in total). This group of islands is where the world’s offshore business began, and it boasts impressive GDP growth rates. Despite its small size, its economy outshines many other Caribbean countries. The year 2023 was particularly successful (and even record-breaking), with GDP figures reaching USD 377.02 million.
How Does the BVI Earn Its Money?
Despite the fact that offshore business is the best-known industry in the BVI, the country does not rely solely on the registration of foreign companies. At least, this is not the main source of income as the BVI draws the majority of profits from the apparel industry, financial services, farming, and tourism.
However, we cannot say that the income brought by the offshore industry is negligible as the country has done a lot to make the local business environment attractive for international capital: there are no corporate taxes here, you can enjoy quite a high level of confidentiality as the registries of beneficial owners are not disclosed to the public, and the BVI is definitely recommendable as a convenient jurisdiction to obtain a banking license, create an investment fund or a trust, or establish a commercial company.
Tourist Industry in the BVI
This is the best-developed industry in the country that brings about a third of its total profits. Let’s take a look at the main components:
- Cruises and excursions. Tourists really enjoy the historical and cultural tours offered in the BVI, as well as sea adventures like diving, fishing, or boat trips.
- Hotel industry. Each traveler can have a perfect stay here regardless of the budget as accommodations vary from luxury hotels to low-priced hostels and apartments. Want an experience out of the ordinary? You can rent a whole island for yourself and enjoy uninhibited unity with nature!
- Car rental tax. The main customers of car rental companies are tourists, so this tax plays a significant role in the state budget.
- Taxes/fees payable for staying in the British Virgin Islands:
- Airport tax that is usually a part of the ticket price (USD 50).
- Ecological and tourist tax: you will need to pay USD 10 if you enter the country by air or sea.
- Ferry departure tax. Foreign tourists who leave the destination by ferry are liable for USD 20, while the locals pay USD 15.
- Accommodation tax. You will have to pay 10% in addition to the cost of the apartment, house, hotel, or cottage that you rent for 6 months or less.
In 2024, the taxes will increase to some extent as planned by the local government.
Financial and Business Environment
This economic sector, which includes banking as its important part, is expected to be actively growing:
- Registered agent/trustee services. These are provided by directors/shareholders of commercial companies.
- Trading/commercial licenses. According to the estimates of the BVI government, the respective revenues are expected to grow in 2024.
- Banking services/money transfers. These fees are also expected to make the country more prosperous this year:
- The fees payable for transfers will presumably grow by 5.62%.
- The profits drawn by banks and trustees are expected to grow from USD 3.64 to 3.55 million in the next year.
- Taxes on particular products and services. International trade, alcoholic beverages, and some other items will continue replenishing the country’s treasury.
- Company registration services. Company renewal fees are paid on an annual basis, and there are also other fees and stamp duties for newly registered companies. Though fluctuations are predicted, the market is still expected to grow.
VAT, inheritance, and corporate taxes are nonexistent in the BVI. However, the requirements for offshore businesses are expected to tighten in 2024, which should be taken into consideration by international entrepreneurs seeking to set up a company here. Follow the above link to ask our experts for the latest updates on the matter.
Agricultural Sector in the BVI’s Economy
A little more than 1% of the country’s GDP is made up of profits from the agricultural sector. Here are the areas it includes:
- Fishing. The waters around the islands abound in various seafood.
- Poultry/livestock farming. The locals rear different farm animals to get profit.
- Growing fruit and vegetables. The islands are good for a large variety of crops.
- Sugar cane plantations. Sugar cane is grown to produce rum which is then exported to many international destinations.
Local Industrial Sector
The BVI’s industrial sector is a significant contributor to the local budget and an important player in the local economy. Let’s look at the industries that bring the most tangible profits:
- Rum production. This industry adds a significant share of profits to the budget.
- Automotive industry and equipment production. Vehicles and machinery are produced in sufficient quantities to support the local treasury.
- Concrete and construction materials. These are exported to two principal destinations, Puerto Rico and the USA.
The industrial sector makes up about 10% of the country’s GDP and gives jobs to 40% of the population.
BVI: 2024 Plans
Here is what the local government is planning for 2024:
- Stimulating growth in the educational sphere.
- Starting new business initiatives.
- Increasing wages for the locals.
- Setting road construction as the main priority.
If you want to opt for the BVI as a place for your offshore business registration and you need additional details, you can contact an expert to discuss your situation and get professional advice.
