The BVI Business Companies (Amendment) Act, 2022 ("the Act") and the BVI Business Companies (Amendment) Regulations, 2022 ("the Regulations") were gazetted on 12th August 2022 and have been effective from 1st January 2023.
Amongst the significant amendments in various parts of the Act and the Regulations, a new requirement to file a financial return (the “Annual Return”) with the registered agent has been introduced.
The BVI Business Companies (Financial Return) Order, 2023 (the “Order”) which was gazetted on 2nd March 2023 and deemed to have come into force on 1st January 2023 sets out the requirements of the Annual Return.
Introduction to the Annual Return in BVI Financial Reporting
Every company shall, in respect of each year, file an Annual Return (which consists of a simple unaudited balance sheet/statement of financial position and an income statement) with its registered agent in the form specified in the Order.
The Annual Return shall be filed within 9 months after the end of the year to which the Annual Return relates.
Where a registered agent receives an Annual Return, he or she shall at the request of the Financial Services Commission (the “Commission”) or any other competent authority, provide the Commission or other competent authority with a copy of the Annual Return. The Annual Return will not be available to the public.
Consequences of failing to file an Annual Return in the BVI
Where a company fails to file its Annual Return, the registered agent shall, not later than 30 days after the Annual Return was due, notify the Registrar of Corporate Affairs (the “Registrar”) in writing.
A company that fails to file its Annual Return within the specified period is liable to the following penalties:
(a) for the first month or part thereof after the filing of the Annual Return was due, the penalty shall be US$300; and
(b) for each month or part thereof after the first month referred to in (a) above, the penalty shall be US$200, up to a maximum of US$5,000.
Where a company is liable to the maximum penalty and has not filed its Annual Return, the Registrar may strike the name of the company off the Register.
Understanding the filing timeline based on different financial years
The earliest date an Annual Return becomes due (as opposed to when it must be filed) from a company is 1st January, 2024, considering that the Act and the Order came into effect on 1st January 2023. This will relate to a company that has a calendar year as its financial year. The company has until 30th September 2024 to file its Annual Return that became due on 1st January 2024.
If a company has a financial year that does not correspond to a calendar year, its Annual Return becomes due in 2024, depending on the month in which the commencement of its financial year falls. However, it may have until any period in 2025 to file its first Annual Return. For example, Company A’s financial year is from March to February. For the purposes of complying with Annual Return filing under the Act, Company A’s first Annual Return becomes due on 1st March 2024, but it has until 30th November 2024 to file the Annual Return.
If, on the other hand, Company A’s financial year is from May to April, its first Annual Return becomes due on 1st May 2024, but the Company has until 31st January, 2025 to file the Annual Return.
Exceptions to the Annual Return filing requirement
Companies that are exempted from the Annual Return filing requirement includes:
(a) a listed company, meaning a company that is listed on a stock exchange;
(b) a company that is regulated under a financial services legislation and provides financial statements to the Commission in accordance with the requirements of that financial services legislation;
(c) a company that files its annual tax return to the Inland Revenue Department accompanied by the company’s financial statements; and
(d) a company in liquidation, except that this exemption does not apply if the company’s Annual Return becomes due prior to the commencement of the liquidation.
Guideline in relation to a company in liquidation
Example 1:
Company A has a calendar year (January – December) as its financial year. Its Annual Return becomes due from 1st January to 30th September of the ensuing year. In June of that ensuing year, the company decides to go into liquidation before it has filed its Annual Return. The company is bound to file its Annual Return because its liquidation commenced after the Annual Return became due.
Example 2:
Company B has a calendar year (January – December) as its financial year. However, in June of that calendar year Company B goes into liquidation before its Annual Return for that year becomes due. Company B is not required to file an Annual Return for that calendar year.
Fidinam can help
While this article provides an overview of the new BVI financial reporting rules, it is crucial to ensure complete and accurate compliance with all aspects of the Act, the Regulations and the Order.
Our experienced team of tax and compliance experts is ready to provide you with personalized guidance and support tailored to your business needs.
If you have any questions or require assistance navigating the financial reporting landscape in the BVI, please do not hesitate to reach out to us via the form below or email: info@fidinamgw.com.
