How to transfer business from the British Virgin Islands cheap?
In Cyprus there is an organisation which can solve such issues. You can do this painlessly until the end of 2019.
In December 2018 the Government of the British Virgin Islands passed a law on economic substance, which entered into force on January 1, 2019. It does not allow companies registered in the jurisdiction of BVI to conduct activities without having an actual presence there. The actual presence is the existence of an office, qualified personnel and a decision center in the BVI. The implementation of these requirements creates a business model in which not only exorbitant costs arise, but the business itself becomes unviable. Given that this jurisdiction has been very popular in business planning for the past 15 years, not everyone can safely leave existing business schemes. What to do? In Cyprus there is an organisation that can solve the problem with a low budget.
What is the current situation?
On October 1, 2019 the 16th section of the British Virgin Islands Economic Substance Act of 2018 entered into force. In accordance with this law, legal entities registered in the British Virgin Islands are required to satisfy the requirements of an economic presence in the BVI as follows:
• for legal entities that existed before January 1, 2019, from June 30, 2019;
• for legal entities created after January 1, 2019, from the moment the company began its activities.
Legal entities must notify their registered agent in the BVI within 6 months after the end of the financial period (usually one year starting from the date indicated above) of any relevant activities they carry out. To pass an economic presence test, a legal entity must:
• conduct core income generating activities in the British Virgin Islands;
• be managed in the BVI;
• have an adequate number of suitably qualified employees physically present in the BVI;
• have an adequate amount of expenditure incurred in the BVI;
• have appropriate physical offices in the BVI.
The regime of economic presence is subject to legal entities engaged in the following types of entrepreneurial activity:
• Fund management
• Intellectual property
• Financing and leasing
• Holding business
• Distribution and service centre
Failure to comply with the set legal requirements may result in fines of up to $400,000.
What should be done immediately?
If your company is carrying on a relevant activity and conducts core income generating activities in BVI you should take the necessary steps to comply with the substance requirements.
These steps should be taken immediately, since the company must pass the economic substance test for the entire financial period during which it carried out its business activities.
If the company is a tax resident of another jurisdiction, the necessary steps must be taken to obtain supporting documentation.
Is there an alternative solution?
Owners of business structures in BVI are advised to analyse the applicability of the law to their companies and think about possible strategies: in particular, liquidating, restructuring, strengthening their presence in the relevant jurisdiction, transferring to another jurisdiction, etc.
One tried solution is to change jurisdiction and / or establish the physical presence of the company in a more business-friendly jurisdiction.
If you decide to move to another jurisdiction, then, depending on your needs, you may consider moving the company to the Seychelles in case an actual business presence is not necessary, or in jurisdictions such as Cyprus or the UAE, with the possibility to establish full physical presence.
When taking into consideration the tendency of the regulatory authorities towards higher transparency and expectation for strong physical presence in the country of registration, it becomes clear that the redomiciliation or registration of companies in a jurisdiction with low or zero requirements for economic presence is a temporary or ineffective solution.
Below is a comparison table on the benefits of each of the jurisdictions mentioned above:
|Description||BVI||Seychelles||Cyprus||Ras Al Khaimah|
|Tax ID number||No||Yes||Yes||Yes|
|Tax Certificate||Tax exemption||No||Tax residency||Tax residency|
|Employment visa for investors/employees||No||No||Possible with conditions||4-6 visas for a company|
* only on income outside jurisdiction
Ras Al Khaimah (UAE) is currently one of the best strategic solutions that allows you to save your business and move it to the Emirates with the ability to establish your physical presence there with office space and visas for investors and employees.
Why Ras Al Khaima?
The registrars of the RAK (Ras al-Khaimah) economic centers developed and offer a unique premium product, which is a corporate structure consisting of an offshore company registered in the international corporate center RAKICC and a subsidiary in the free trade zone RAKEZ. This type of business structure allows you to combine the advantages of offshore international companies, while maintaining operational and physical presence in the jurisdiction of registration with access to local and international banks.
By taking advantage of the premium product, by a simple procedure, investors and managers can obtain a visa and a residence permit in the UAE, which allows them to effectively manage expenses, employment and tax planning matters of the company.
The strategic location of the UAE is a bridge between Asia, the Middle East, Europe and Africa. The emirate of Ras al-Khaimah is one of the locomotives of business in the UAE. The economic policy in the emirate is based on advanced technologies, reliable regulatory systems and compliance policies, modern legislation with the influence of English law and access to English law courts. It should be well noted that the practical implementation of the economic substance principles, supported by adequate business infrastructures was established long before similar laws were adopted in other jurisdictions.
The main advantages of doing business in Ras al-Khaimah are considered:
• Excellent infrastructure, which is being improved every day.
• Ability to open bank accounts locally and internationally.
• Tax residence certificates for legal entities and individuals.
• The right of investors and employees to apply for a visa in the UAE.
• Doing business without corporate / personal taxes and the ability to benefit from double taxation agreements by creating a subsidiary.
• There are no restrictions on the ownership and repatriation of capital and profits.
• International investment and global trade.
• Protection of investments in other foreign countries.
• Consistent and long-term commitment to liberal economic policy.
• Stable political situation
• Financial security of the region: it is not a coincidence that the jurisdiction was assigned by international agency Standard & Poor’s an A rating, that is, the highest.
Who to contact?
Those who are based or located in Cyprus and are interested in doing business in Ras al-Khaimah will be pleased to know that in Cyprus there is an organisation that can offer effective and affordable solutions. VK Law Consultancy FZE, part of the ARNOS group of companies with a representative office in Cyprus, is the official registration agent in Ras al-Khaimah, which greatly facilitates the work with this jurisdiction for local (Cypriot) service providers and entrepreneurs.
Due to the changes mentioned above, ARNOS (www.arnos-group.com/en/) offers its customers the service of redomiciliation of companies to Ras al-Khaimah from another jurisdiction for FREE until December 31, 2019. More details here www.arnos-group.com/en/news/ek-pr.html