British Virgin Islands

Registrations and Establishing an Entity

To run a payroll in the BVI, companies must first register as a legal entity. All businesses are required to:

• Reserve and register a company name
• Appoint a licensed registered agent
• Submit incorporation documents to the BVI Financial Services Commission
• Obtain a Certificate of Incorporation
  

After incorporation, employers must register with the Inland Revenue Department to receive a payroll tax registration number and receive the official tax package.

Businesses are categorised into Class 1 or Class 2 employers based on size and annual payroll, which affects their applicable tax rate.

Banking

There is no requirement to use a local bank account for payroll or tax payments, although it is generally recommended. Standard bank hours are Monday to Thursday from 09:00 to 15:00 and Friday from 09:00 to 17:00.

Working Week

The BVI standard working week runs from Monday to Friday, with typical working hours of 08:00 to 17:00. The legal maximum is 40 hours per week. Overtime must be compensated at 1.5 times the regular hourly wage.

Employment Law

Holiday Accrual

Employees are entitled to a minimum of 12 days of paid annual vacation after one full year of continuous service. Public holidays are additional and observed as paid leave.

Maternity Leave

Female employees are entitled to 12 weeks of maternity leave, with at least 6 weeks taken after childbirth. To be eligible for full maternity pay, the employee must be covered under the Social Security Scheme.

Paternity Leave

There is no statutory provision for paternity leave, but employers may provide it voluntarily or include it in employment contracts.

Sick Leave

Employees qualify for paid sick leave after 6 months of employment. Medical certification is required. Social Security benefits may apply depending on the length and nature of the illness.

National Service

There is no form of compulsory military or civilian service in the BVI.

Tax & Social Security

The BVI imposes no personal income tax, corporate tax, capital gains tax, inheritance tax, or VAT. Instead, a Payroll Tax is levied on remuneration paid to employees and self-employed individuals.

Payroll Tax

Applies to remuneration up to $1,000,000 per person per year, split between employer and employee:

Employers are responsible for withholding both portions and submitting the full amount to Inland Revenue. Payroll tax must be reported monthly, and an annual return must be filed by 31 December.

Social Security Contributions

Social Security contributions are mandatory and fund benefits such as pensions, maternity, sickness, and injury allowances.

Maximum insurable earnings:

• Social Security: $51,000 annually
• National Health Insurance (NHI): $102,000 annually

Contributions are due monthly by the 14th of the following month.

Payroll

Payroll must account for:

• Base salary
• Allowances
• Overtime
• Tax and social security deductions

Employees must receive itemised payslips, either electronically or in print.

Reports

Payroll records and accounting documentation must be retained for a minimum of 5 years. Employers must maintain:

• Monthly and annual payroll tax returns
• Social Security and NHI payment records
• Employee contracts and benefit summaries

Payslip Example

Payslips must show gross earnings, deductions (payroll tax, social security, pension), and net pay. There is no legal format, but clear documentation is required for audits.

Reporting

Key obligations include:

• Monthly payroll tax return and remittance
  
• Annual return by 31 December
  

Social Security and NHI monthly submissions

Late payments may incur interest and financial penalties.

New Employees

Employees must be registered with:

• The Social Security Board
  
• National Health Insurance
  
• The Inland Revenue Department
  

Employers must inform new hires of their tax responsibilities and ensure compliance with exemption thresholds.

Leavers

Employers must provide a termination letter and final payment, including any earned but unused leave. Deductions for payroll tax, social security, and NHI must be settled. The employee must also be deregistered from all applicable agencies.

Redundancy pay and notice periods are determined by length of service and contractual terms.

Employee Benefits

Mandatory employee benefits in BVI include:

• Paid annual vacation
• Sick leave
• Social Security coverage
• NHI coverage
• Severance pay in applicable cases

Optional benefits often include:

• Private health or life insurance
• Performance bonuses
• Travel allowances
• Flexible work hours

Expenses

Work-related expenses such as travel, fuel, or meals can be reimbursed without payroll tax if they are not part of base compensation. Company cars, housing, or personal-use benefits may be treated as taxable income if deemed in-kind remuneration.

Visas

Citizens of the US, UK, Canada, and many Commonwealth countries do not require a visa for stays under 6 months. However, for work or longer stays, work permits are required for non-Belongers.

Work Permits

Non-Belongers must apply for a Work Permit sponsored by a local employer. There are two types:

• Temporary Work Permit (up to 3 months)
• Annual Work Permit (renewable yearly)

Required documents include:

• Job offer and contract
• Employer’s sponsorship application
• Medical and police clearances
• Passport photos
• Proof of qualifications

Permits are processed by the Labour Department, and renewals must be filed in advance to avoid employment gaps.

• The BVI operates a zero-income-tax regime, making payroll tax and social contributions the key employer obligations.
• NHI and Social Security must be calculated based on insurable earning thresholds.
• Redundancy and severance provisions follow the Labour Code 2010.
• The Payroll Tax system distinguishes between Class 1 and Class 2 employers, affecting tax rates and reporting.
• Work permit processes are employer-driven and require justification that a suitable local worker could not be found.
  
  

Further Information

For more information, or assistance with British Virgin Islands Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.