Is my BVI company tax resident in Australia?

The British Virgin Islands (BVI) have long been a highly attractive base for international businesses with over 360,000 registered companies registered there. BVI companies require a director who can either be an individual or a company.

When business owners relocate from to Australia with a BVI company, they should appoint a replacement director to maintain overseas Central Management and Control (CM&C). These companies are typically not operationally intensive so an external party will be engaged to serve as the director.

From a tax perspective, the key reference point when considering a cross-border matter is the Double Tax Agreement (DTA) between the two relevant countries. However, as the BVI does not apply domestic taxation, except where locals are employed, the central question is therefore whether your BVI incorporated company is taxable in Australia.

We cover the question of CM&C in greater depth here.

If the company uses a nominee director for your company who does not exercise genuine control, it may not be sufficient to establish overseas management which would therefore mean that the company is:

• Taxable in the BVI at 0% (due to its permanent establishment there); and

• Taxable in Australia at 30% (or 25% for base rate entities)

This exposure applies annually for each year the company is deemed to be centrally managed from Australia.

If you are an Australian tax resident with a BVI incorporated company, it is essential to review whether the entity is still managed and controlled offshore. Where changes are needed, ONUS Directors can assist in reviewing your structure and helping you mitigate unnecessary Australian tax exposure.