One of the most frequent questions we receive at our BVI site – bviaccountants.com – is whether the British Virgin Islands (BVI) Business Companies Act requires BVI Business Companies to prepare and submit Financial Statements (FS) and Annual Returns.
Prior to the 1st of January 2023 the BVI Business Companies Act did not require BVI Business Companies to perform any submissions of Financial Statements or any Annual Returns unless the entity was regulated (depending on regulation). However, from 1 January 2023, following amendments to the BVI Business Companies Act, all BVI Companies (limited exceptions apply) are required to submit to their Registered Agent, an Annual Return, which will basically be a simple one page Income Statement and Balance Sheet which will need to be completed based on each Company’s financial records (final template not realeased yet).
The Annual Return will need to be submitted to the Registered Agent 9 months after the financial year end of each Company. For example, a Company with Financial Year End 31/12 will need to submit its Annual Return by the 30th of September of the following year. Failure by a company to file its annual return constitutes an offence and may result in prosecution or a fine. The Registered Agents will need to inform the BVI Registrar 1 month after the deadline in cases where a Company fails to submit its Annual Return.
Exemptions for this annual submission will apply to listed companies, regulated companies which provide financial statements to the commission, and Companies which file annual tax returns accompanied by FS to the BVI Inland Revenue Department. Such entities will not have to submit an Annual Return.
The Annual Return will not need to be audited.
Key Takeaway: In light of the above, please be prepared and aware that you will need to submit such an unaudited Annual Return to your Registered Agent once per financial year for your BVI Company. Contact us today on how our BVI office can assist you with preparation of BVI Entity Financials and Annual Returns.
Financial Records – What they are and why they are needed
To continue with, please note that the requirement to keep Financial Records is still applicable for BVI Companies. The BVI Business Companies Act (which can be found here) prescribes on Article 98 that BVI Companies need to keep Financial Records which will support the financial transactions of the Company for a period of five (5) years from the date of the transaction. Such address can be anywhere in the world, but it needs to be known by the Registered Agent of the Company. Financial Records can be anything from invoices, agreements, bank statements, board of directors resolutions approving a transaction and any other documentation of accounting significance.
In addition to the above, any BVI Company which wishes to prepare a full set of Financial Statements for any other reason can still proceed with doing that. Financial Statements can be prepared for any purpose, such as requirement from Banks, Tax Authorities in the country of domicile of the UBO, good governance practice etc. These Financial Statements will differ from Annual Returns in the sense that Financial Statements come with full set of notes and more information that the Annual Return will require.
Summary: In short, yes, your BVI Business Company will most likely need to prepare Accounting Records so that to be able to correctly complete its Annual Return from 1/1/2023. This requirement has arisen during August 2022 as the BVI Financial Services Commission has passed amendments to the BVI Business Companies Act. These amendments are effective from 01 January 2023 and will require for BVI Business Companies to submit to their Registered Agent an Annual Return once per calendar year. Penalties will apply to entities which do not comply to this requirement. The template of the Annual Return has not been made available yet, but its expected to be a simple Income Statement and Balance Sheet. There will not be a need for an audit. We will provide you with more information as the legislation and regulations unravel.
How Asterisk can help:
Through our BVI Co and specialized BVI Accounting website https://bviaccountants.com we can assist with preparation of the Annual Return, Accounting Records and full set of Financial Statements for BVI Entities. We can also provide you with any information you may need through our huge knowledge database we have drafted for BVI Entities. Contact us today on how we can assist you.