As noted in our previous updater, amendments to the BVI Business Companies Act (Revised) (BCA) came into force on 1 January 2023 introducing the requirement for BVI companies to file an annual financial return (AFR) with their registered agent. The BVI Business Companies (Financial Return) Order, 2023 (the Order) enacted in March, details (1) the form of the AFR, (2) the due and filing dates, and (3) entities exempted from filing the AFR.
Detailed below is a comprehensive guide to the AFR requirements and what BVI companies need to know in order to be ready to prepare their AFR.
1. What information should the AFR contain?
The Order, set out by the British Virgin Islands Financial Services Commission (FSC), imposes an obligation on all BVI companies, with some limited exceptions (below), to detail their financial position. The Schedule to the Order includes an example template for the AFR which takes the form of a simple balance sheet/statement of financial position and income statement. A link to the Order is referenced for your further reading.
2. Key dates and deadlines
AFRs become due at the end of a BVI company’s financial year and must be filed with the registered agent within nine (9) months of the BVI company’s financial year end (FYE). A BVI company’s financial year is either the calendar year (default) or the 12 month period which the BVI company has expressly adopted.
For example, where a BVI company’s financial year is the calendar year, then the first AFR would become due on 1 January 2024 and must be filed with the registered agent within 9 months, ie by 30 September 2024.
Below is a table setting out common financial years commencing in 2023 and the applicable first due and filing deadlines:
|First applicable financial year for AFR||AFR due date||AFR filing deadline with registered agent|
|1 January 2023 to 31 December 2023||1 January 2024||30 September 2024|
|1 April 2023 to 31 March 2024||1 April 2024||31 December 2024|
|1 July 2023 to 30 June 2024||1 July 2024||31 March 2025|
|1 October 2023 to 30 September 2024||1 October 2024||30 June 2025|
Financial returns should be filed annually thereafter in accordance with either the calendar year or the financial year (as adopted by the BVI company).
The following entities are not required to file an AFR:
- a listed company, (listed on a stock exchange)
- a BVI company that is regulated under a financial services legislation and provides financial statements to the FSC in accordance with the requirements of that financial services legislation
- a BVI company that files its annual tax return with the Inland Revenue Department accompanied by the BVI company’s financial statements, and
- a BVI company in liquidation, except that this exemption does not apply if the BVI company’s annual return becomes due prior to the commencement of the liquidation
Repercussions of non-compliance: What happens if an AFR is not submitted to the registered agent within the specified time frame?
The registered agent will be required to inform the BVI Registrar of Corporate Affairs (Registrar) within 30 days of the respective deadline of any AFRs not received, which may result in further action being taken by the Registrar.
Failure by a BVI company to file its AFR constitutes an offence and will result in the company losing its good standing status, as well as resulting in fines, or even being struck-off the Register of Companies by the Registrar.
Can a financial year period be changed?
In short, yes.
In respect of the FYE date, it is ultimately a commercial decision resolved and documented by the BVI company directors. For instance, many BVI companies are opting to align the various BVI annual filing deadlines for ease of administration. In order to do so, a BVI company may make an application to the International Tax Authority (ITA) to align the economic substance financial period with the BVI company’s FYE.
Who has access to my company’s AFR?
As the AFR is filed with the registered agent, its details remain confidential and within the custody of the registered agent. Only pursuant to a legal obligation, must the registered agent make the information available to authorised institutions in the BVI, eg the FSC, the ITA and the Attorney General.*
*For example, the FSC may request the information in accordance with the powers granted to it under the Financial Services Commission Act, 2001; such would also be the case with regard to a request by the ITA under the Mutual Legal Assistance (Tax Matters) Act, 2003, the Financial Investigation Agency under the Financial Investigation Agency Act, 2003 and the Attorney General under the Criminal Justice (International Co-operation) Act, 1993.
Does the AFR need to be audited?
There is no requirement for the AFR to be audited.
Accounting standards which can be used in preparing the AFR
Currently the BCA does not prescribe specific accounting standards for the preparation of the AFR. Marbury’s accounting services team can prepare client accounting records and AFRs in accordance with the International Financial Reporting Standards (IFRS), as they are widely known and used, and also accepted in the BVI.
Currencies which can be used for the completion of the AFR
Although the AFR template in the Order shows USD, the Order also specifies that any currency can be used in which a BVI company prepares its financial statements.
Summary of key points for Marbury clients
- You will need to submit a financial return (income statement and balance sheet) to Marbury on an annual basis
- There will be exemptions to this requirement but such exemptions are limited (see above)
- If your BVI company’s financial year is the calendar year, then your first submission will need to be filed with us by 30 September 2024
- No audit is required
- You can use the currency in which your BVI company usually prepares its financial statements
- There will be penalties for late submission
What do I need to do?
Clients should maintain a formal set of basic accounts for their BVI company during 2023, and note the timeframe needed to lodge a copy of the AFR with us as registered agent.
Readers are reminded that pursuant to the BCA, BVI companies are obligated to maintain accounting records; these records and underlying documentation of the BVI company must sufficiently show and explain the BVI company’s transactions so that the financial position of the BVI company can, at any time, be determined with reasonable accuracy. The FSC may, at any moment, request access to these underlying accounting records, in which case the registered agent would request the same from the person responsible for maintaining the records, for immediate presentation.
If you are unsure as to the ongoing requirements for your BVI company or have any queries regarding the new AFR requirements detailed here, please contact your usual Marbury advisor or get in touch via email@example.com.