Overview of Accounting and Auditing in British Virgin Island
All companies registered in BVI are required to maintain accounting and auditing records in a form and manner to reflect the company's activity and truthfully show the financial status of the company. No financial statements, annual reports, etc are required to be filed by registered commercial companies. However, the exemption is made for private, professional, and public funds and other license structures. The companies are required to keep accounting records and documents for 5 years. All documents supporting the company's activity should be kept at the registered agent of the company or any other place determined by the directors of the company. If the records are with the registered agent no action is required. However, if the records are kept at any other place other than the registered agent then the company must notify in writing, the registered agent of the location of the accounting records. If the records are maintained electronically, the location of the server on which it is maintained is sufficient to meet the requirements.
Annual Financial Return
From 1 January 2023, BVI companies are required to file an annual return. Annual Return provides details of specific financial information. Every company is required to file an annual return to its Registered Agent. At the end of a company's financial year, the annual return becomes due. In BVI, a company's financial year could be either the calendar year or a duration of 12 months which is expressly adopted by the company. If the company follows the calendar year, then the annual return becomes due on 1st January 2024. However, if the companies have adopted a financial period that does not correspond with the calendar year, then the first annual return becomes due in the month in which the financial year expressly adopted by the company comes to an end. The annual financial return is required to be filed with the Registered Agent within nine months from the due date. Companies that follow the calendar year are required to file the annual return with the Registered Agent by 30th September 2024.
Entities exempt from filing annual return with registered agents
The following are the entities exempt from filing annual returns with their Registered Agent:
- A company listed on a stock exchange.
- A company regulated under financial services legislation and which provides financial statements to the Commission as per the requirements of the legislation.
- A company that files its annual tax return to the Inland Revenue Department accompanied by the company’s financial statement.
- A company in liquidation other than a company whose annual return becomes due before the commencement of liquidation.
Annually Audited Financial Statements
There is no obligation on the companies to undertake financial audits or submit audited accounts to state authorities. As the financial statements are not publicly accessed. Despite this, the Securities and Investment Business Act 2010 and the Mutual Funds Act require all private, professional, and public funds along with licensed organizations to appoint an auditor and conduct an audit of their financial statements.
There is no requirement to submit the annual audited financial statements to the government authorities. But the preparation of annual audited financial statements is required for the purpose of:
- Compliance with CFC legislation
- Opening a bank account or updating company data with your bank
- Business estimation such as sales, etc
- Internal purposes of management and business owners
General Accounting Information for companies in the British Virgin Islands
Every Registered company is required to keep reliable records and documentation necessary to show and explain the company transactions and the financial position of the company as and when required. The following documents are required to be maintained by the company:
- Official bank statements of all bank accounts of the company;
- Relevant contracts
- Invoices, acts, set-offs
- Statutory documents related to subsidiaries and associated enterprises
- Share purchase contracts
- Financial statements of subsidiaries and associates
- Promissory notes and other financial obligations
- Statement of brokerage on securities
- Accounting books
- Any other document showing the company's activities
The Directors determine where the accounting records of the company will be kept, whether with the company's registered agent or any other place within or outside BVI. Where the records are kept outside the registered agent's office, they must be provided to the registered agent as and when desired by him without any delay. The directors of the BVI are personally responsible for keeping accounting records in a manner that reflects the true and fair view of the company's financial position. The accounting has to be stored for at least 5 years from the date of completion of the transactions to which records relate. Failure to maintain the accounting records is a violation of law and leads to fines or prosecution.