The Financial Services Commission (FSC) of the British Virgin Islands (BVI) has published an industry circular regarding the first filing of annual financial returns by BVI companies.
Postponement of deadlines and waiver of penalties
In Circular No. 34, published on 26 September 2024, the FSC recalls that every BVI company must file with its registered agent an annual financial return within nine months after the end of the company’s financial year. The deadline for the first filing of the annual return is 30 September 2024.
At the same time, the Commission informs that it is considering extending the deadline to ensure that companies can properly comply with their reporting obligations. This decision is being discussed in light of the existing “policy and logistical issues”.
The FSC has notified companies and their registered agents that until a decision is made to extend the deadline, it will not apply any enforcement actions (such as penalties or strike-offs) for failure to submit the return by the original deadline.
The Commission will inform the industry about the coming decision.
Annual financial return in the BVI
The requirement to file annual financial returns was introduced for most BVI commercial companies on 1 January 2023. The company must file the first return by 30 September 2024 (if the company’s financial year is the 2023 calendar year). The return is submitted not to government agencies but to the company’s registered agent.
The annual return consists of a simplified balance sheet and an income statement for the preceding financial year. It is prepared using accounting records and underlying documentation that a company is required to maintain and retain by law. Unlike standard financial statements, the annual return does not include other types of statements or notes and does not require an auditor’s report.
If a company fails to submit an annual report to its registered agent for any reason, the latter must notify the Register within 30 days. The registered agent is also obliged to provide reports of the companies it serves to the FSC upon its request and keep them for at least five years after the termination of its agent services for the relevant company.
Penalties for companies and registered agents
The following penalties apply for failure to comply with the requirements regarding annual returns:
- If the annual return is not submitted on time, the company will be penalized 300 USD for the first month and 200 USD for each subsequent month—up to a maximum of 5,000 USD.
- Failure to submit the return after the maximum penalty (5,000 USD) has been applied gives the Registrar the right to strike off the company from the Register.
- Registered agents are penalized 3,000 USD for failing to notify the FSC within 30 days of a company’s non-compliance, failing to submit an annual return when requested by the FSC, or failing to keep annual returns during the required period.
Actions to take
BVI companies that have not yet filed their first annual financial return are advised to expedite its preparation and submission to the registered agent.
Though the initial deadline has already passed, the BVI regulator is accommodating businesses and promises not to impose penalties before the new deadline, which will be announced soon.
By preparing and submitting the return as soon as possible, your BVI offshore company can avoid penalties and the risk of being struck off later. This will also protect your company’s registered agent from possible actions by the BVI FSC.