Language: The official and spoken language is English.

Population: Tortola, the largest island, has approximately 9,000 inhabitants, and 3,000 people live on the other islands.

Political System: In 1672, Britain claimed Tortola. At the same time, Denmark asserted her sovereignty over St. Thomas and St. John, and in 1773, Denmark purchased St. Croix from France. In 1917, the United States paid $25 million for the Danish islands.

The British Virgin Islands is an internally self-governing colony with a ministerial system of government. The governor, who is appointed by the Crown, is responsible for internal security, external affairs, defence, the civil service, and the administration of the courts and finance.

There are three major parties: the Democratic Party, the Virgin Island Party and United Party. Elections are held at intervals of not more than five years.

Legal System: The legal system is based upon English Common Law. The governor appoints a local officer for the islands of Anegada, Virgin Gorda and Jost Van Dyke, but there is no system of local government. The highest court is the West Indies Associated States Supreme Court. Lower courts are the Court of Summary Jurisdiction and the Magistrate's Court.

Taxation: There are double-taxation treaties relating to residents with Japan and Switzerland as a result of the extension of the United Kingdom treaties with these countries to the British Virgin Islands. The long-existing and popular treaty with the United States was terminated as of Jan. 1, 1983. Income tax paid by persons in the participating treaty countries to British Virgin Islands residents is a maximum of 15% for dividends, normal rates for interest and no taxes for royalties.

For domestic business, a company would pay 15% tax on its chargeable income.

Incorporation: There are three types of companies available in the British Virgin Islands: the International Business Company (IBC), the CAP 243 Resident Company and the CAP 243 Non-Resident Company.

The International Business Company: An IBC can be incorporated within 48 hours, and it can be incorporated with any name, unless it includes a word indicating a connection with the royal family or government. Governmental approval is required for using words such as Bank, Trust, Assurance, Insurance or Building Society. The name may be in any language and any suffix can be used to denote limited liability: Limited, Ltd., Corporation, Corp., Incorporated, Inc., S.A., A.G., G.m.b.H., B.V. and N.V.

Requirements for incorporating an IBC are:

• An IBC is restricted from doing business with British Virgin Island residents and also from owning property.
• The company is required to have a registered office in the BVI.
• A registered agent -- who must be either a lawyer, a solicitor, a chartered accountant or a licensed trust or company management company -- is required.
• At least one director, who can be either a person or corporation, is required. The director is appointed initially by the subscribers to the Memorandum and Articles of Association, and other officers can be appointed by resolutions. Alternate directors can also be appointed. The names and addresses of the directors and officers are not available in any public register, although a company may choose to maintain the information with the Registry so that official certification can be provided if required.
• There has to be at least one shareholder, and a minimum of one share must be issued by the directors at their first meeting. If the minimum numbers of shares are not issued, the directors are responsible and liable for any acts of the company.
• All issued shares (in bearer or registered form) must be paid for in full, but payment can be in the form of a promissionary note signed by the shareholder.
• The company must keep a share register at the registered office; however, this information is not available to the public.

• The company name
• The registered office address
• The name and address of the Registered Agent
• The objects of the company
• The authorized share capital and the currency of the share capital
• The classes of shares and if they are in bearer or registered form (or both)
• A notice provision for bearer shares

The directors are permitted to hold meetings in the BVI or in any other country, and there is no requirement to hold an annual general meeting. If a directors and shareholders meeting does not require the presence of the individuals at a particular venue, it may be held over the telephone.

The share capital, issued in any currency, may be of nominal or par value. The normal authorized share capital is US$ 50,000 of nominal value, because this is the maximum authorized share capital for the minimum duty of currently US$ 300. An initial and annual duty of US$ 700 is required if the authorized share capital is in excess of US$ 50,000 of nominal value.

The company is totally exempt from any form of taxation. However, it is required to pay an annual license fee of US$ 300 if the share capital is up to US$ 50,000 and US$ 1,000 if is more than that.

The CAP 243 Non-Resident Company: Until 1990, CAP 243 Non-Resident Companies were widely used for insurance business, but under the amendments to the ordinance, a licence is required.

The company must be Non-Resident for taxation purposes, if the control and management of the affairs are exercised outside the BVI. These companies pay a flat licence fee of US$ 250 to the BVI's government and an annual return filing fee of US$ 50. There must be two directors, a company secretary and a minimum of two shareholders. There is no obligation to file audited accounts.

The CAP 243 Resident Company: This type of company is used only for carrying on a business in the BVI. It would qualify for treaty relief under the current taxation treaties in effect.

Summary: Some of the advantages of selecting the British Virgin Islands as an offshore financial center are:

• An established domestic banking system with international connections
• Political and economic stability
• No foreign exchange controls
• A modern Companies Act providing maximum flexibility and total confidentiality
• Exemption from all domestic taxation
• Immediate company availability