The Business Licensing Act, 2022, which supplements the Virgin Islands Investment Act passed in 2021, has recently been enacted (August 2022). These two acts collectively aim to increase investment by providing new opportunities for local and foreign businesses in the British Virgin Islands.
Geographically small but by no means invisible in the global market, the BVI boasts a desirable location, business-friendly tax framework, and intelligent corporate law regime. The BVI has long been a desired location for investors seeking a piece of all that ‘Nature’s Little Secrets’ has to offer.
This new legislative framework should increase certainty and transparency. It should also improve the ease of doing business in the BVI, which has traditionally been heavily dependent on relationships.
The Virgin Islands Investment Act 2021, which came into effect in August 2021, replaces the Pioneer Services and Enterprises Act, the Hotel Aid Act, and the Encouragement of Industries Act. The Business Licensing Act came into effect in August 2022 and replaces the Business, Professions and Trade Licences Act which was the legislation that has regulated doing business in the BVI for several decades.
There are several features introduced in the Virgin Islands Investment Act. A key component is the introduction of the Virgin Islands Trade Commission, whose primary functions include:
- considering investment proposals and approving investment plans as well as promoting investment in the BVI;
- maintaining a register of both domestic and international investors and their investments;
- reviewing compliance with any approval, registration requirements, and conditions by investors and investments; and
- undertaking periodic reviews on investment policies and trends both domestically and internationally.
National Economic Investment Fund
Another significant introduction is the establishment of a National Economic Investment Fund, to which investors with qualifying investments will be required to contribute. The Fund will finance infrastructure development, environmental protection, and development and social programmes in the BVI.
There are specific provisions that are beneficial to foreign investors.
Quasi-Residency now available to Foreign Investors – Before the passing of the Investment Act, there was no concept of citizenship or residency by investment available to foreign investors. Now, subject to a foreign investor satisfying specific criteria, he or she could be eligible to obtain BVI visas and resident permits for him or herself and immediate family. The permits would allow BVI residency from year-to-year, albeit for a far less permanent period than typical in other jurisdictions’ investment models.
There are two (2) options available to foreign investors:
- Stay incentive –An investor is eligible to receive a two (2) year entry permit, provided the investor maintains the business throughout that period. A minimum investment of $5 million is required, and 60% of all employees must be Belongers (effectively BVI citizens); and
- Residency by investment– The Investment Act establishes a Residence by Investment Unit, and applicants for residency by investment must apply through an approved agent who must be a Belonger. The level of investment or other eligibility requirements are to be determined.
There are also opportunities for BVI Belongers. While reservation of certain businesses and business activities for Belongers and/or Belonger-controlled businesses occurs to a limited and somewhat undefined extent, the Virgin Islands Investment Act 2021 expressly grants the Cabinet expansive powers to impose whatever conditions it sees fit on foreign investors. For example, stipulating: (i) the value of the investment; (ii) the number of employees, (iii) the location of the investment, and (iv) specific sub-sectors of business activity, if any, and in some cases, requiring foreign investors to enter into a performance agreement with the Trade Commission.
Finally, foreign investors should be aware of some specific caveats.
- The legislative framework would require a two-tier approval process where foreign investors must first apply for and obtain a certificate of approval under the Virgin Islands Investment Act 2021 before applying for the Business License.
- In the current draft of the amendments to the Business Licensing Act, the grant of the certificate of approval under the Virgin Islands Investment Act does not guarantee the grant of the Business License.
- None of the quasi-residency provisions accelerate the process of obtaining BVI Belongership (citizenship).
- The Virgin Islands Investment Act does not specify the amount of the contribution that each investor is required to make to the National Economic Investment Fund.
If you have questions or need additional information about the BVI’s corporate law and business licensing regime, don’t hesitate to contact us anytime.
The full text of the BVI’s Business Licensing Act can be viewed here.
The full text of the Virgin Islands Investment Act can be viewed here.
This information is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Practice Update without seeking the advice of legal counsel. Prior results do not guarantee a similar outcome.