The British Virgin Islands (BVI) is an attractive and affordable jurisdiction for hedge funds. The legislative structure in the BVI is modern and internationally recognized. The authorities have successfully created a framework that is rigorous in terms of anti-money laundering and know-your-customer requirements.
The BVI offers a suitable level of regulation for private and professional funds combined with flexibility and great value for money. It’s considerably less expensive to establish a fund in the BVI than comparable jurisdictions such as the Cayman Islands. Hedge funds domiciled in the BVI would benefit from the availability of higher quality banking and custody services in the jurisdiction.
As the up and coming premier jurisdiction for the formation of investment funds, having over 3,000 funds registered or recognized under the Securities and Investment Business Act 2010 (the Act), the primary legislation governing the formation and operation of hedge funds in the British Virgin Islands. These funds are regulated by the Financial Services Commission (the Commission), the financial regulator in the British Virgin Islands, which was established by and whose powers primarily originate from the Financial Services Commission Act 2001.
The Act requires all investment funds falling within its definition of “mutual fund” to be recognized or registered with the Commission. The Act further requires all managers and administrators of mutual funds to be licensed where the manager or administrator is incorporated in or carries on its business from the British Virgin Islands.
The Act defines a “mutual fund” as a company incorporated, a partnership formed, a unit trust organized or other similar body formed or organized under the laws of the British Virgin Islands or of any other country or jurisdiction which: a) collects and pools investor funds for the purpose of collective investment; and b) issues shares (defined as shares in the share capital of a company, an interest in a mutual fund partnership and a unit in a mutual fund unit trust) that entitle the holder to receive on demand or within a specified period after demand an amount computed by reference to the value of a proportionate interest in the whole or in a part of the net assets of the company, the partnership, the unit trust or other similar body, as the case may be; and includes: i) an umbrella fund whose shares are split into a number of different class funds or sub- funds, and ii) a fund which has a single investor which is a mutual fund not registered or recognized under the Act.
British Virgin Islands based funds, managers and administrators are not required to pay any income taxes to the British Virgin Islands Government under the British Virgin Islands Income Tax Act. Furthermore, the investors in such entities will not have to pay any British Virgin Islands income taxes or capital gains taxes on payments those investors receive. Provided the entity has no employee in the British Virgin Islands, it will have no liability to British Virgin Islands payroll taxes. Capital gains realized with respect to any shares of a fund are exempt from income tax in the British Virgin Islands and there are no estate, inheritance, succession or gift taxes payable in the British Virgin Islands with respect to any shares of a fund
Monarch: Queen Elizabeth II
Governor: David Pearey Premier Hon. Ralph T. O’Neal
National Anthem: “God Save the Queen”
Flag: Union Jack
Territory status: Non-Sovereign, overseas territory of the United Kingdom, internal self-governing
Legal system: English Law
Judicial Branch: Eastern Caribbean Supreme Court
Largest Island: Tortola
Capital: Road Town, Tortola
Language: English (official) and Spanish
Population: 28,882 (2009 est. based on 2005 census)
Religion: Christianity (major), Hinduism, Islamic Faith
Airport & Code: Terrence B. Lettsome International Airport (EIS)
Monetary Unit: US Dollar. Major credit cards are accepted in many- but not all establishments
Calling Code: 1 (284)
Economy: One of the most prosperous in the Caribbean; highest income generators – tourism and financial services
Banks: Bank of Nova Scotia, National Bank of the Virgin Islands, Banco Popular de Puerto Rico, VP Bank (BVI), First Caribbean International, First Bank Virgin Islands
Sales Tax: None
Departure Taxes: $20.00 per person leaving by air, $5.00 leaving by sea and $7.00 for cruise ship passengers