* BVI Set To Abolish Corporate Income Tax"Under the new international rules, agreed to by the UK government, the BVI is no longer permitted to allow IBCs (International Business Companies) to operate here tax-free, while we impose income taxes on other businesses," Mr Skelton stated last week.
As a consequence of this reform, undertaken to satisfy international bodies such as the OECD and the European Union, from 1st January the 15% corporate tax will be abolished for local businesses, whilst the current income tax system for employees will also disappear.
However, in its place, a new payroll tax is to be levied at a rate of 16%, half of which will be paid by the employer and the other half by the employee, although the first $7,500 of income will remain tax free.
Furthermore, local firms will be required to pay annual licence fees, whilst IBCs will face a maximum 20% rise in their annual licence fees.
“These changes represent a serious reform of our tax system,” Mr Skelton pronounced.
He added: "I can assure you that the decision to change the tax code was not taken lightly. The Ministry of Finance, the attorney general's chambers, the BVI Financial Services Commission and the Fiscal Review Committee have worked diligently over the past months to find the best way to protect the strength of our economy, while also protecting our duty to a fair and equitable tax system.”