BVI Business Company: what Indian founders, NRIs and Indian groups should know in 2026
No tax on profits or gains, but real substance, beneficial ownership and annual return rules — and Indian ODI rules that limit what resident individuals can do. A 2026 briefing.
The British Virgin Islands remains a widely used jurisdiction for international holding companies and joint ventures. Its rules have tightened considerably since 2019, and for Indian residents the Indian rules matter just as much as the BVI ones.
The basics
- Companies are formed as BVI Business Companies under the BVI Business Companies Act, 2004, through a licensed registered agent.
- There is no BVI tax on company profits or capital gains. Payroll tax applies only where the company has employees.
- An annual government fee is payable, based on the company's authorised shares.
The compliance that now comes with it
| Economic substance | Companies carrying on a relevant activity — banking, insurance, fund management, finance and leasing, headquarters, shipping, holding business, intellectual property, or distribution and service centre business — must meet substance requirements and report annually |
| Annual return | Since 2023, an annual financial return is provided to the registered agent within 9 months of the financial year end; it is not public |
| Registers | Since 2 January 2025, the register of members and details of beneficial owners (those holding 10% or more of the shares or voting rights, or otherwise exercising control) are filed with the Registry, and beneficial ownership information is not public; a new company appoints its first director within 15 days of incorporation and files its register of directors within 15 days of that appointment |
International standing
The BVI is on Annex II of the EU's list — jurisdictions that cooperate but have commitments still pending — and is not on the EU list of non-cooperative jurisdictions (Annex I). Separately, the FATF has placed the Virgin Islands (UK) under increased monitoring since June 2025, and the BVI has been on the EU's list of high-risk third countries for anti-money laundering purposes since 29 January 2026, so banks and counterparties may apply enhanced due diligence. India and the BVI have no double taxation agreement; a tax information exchange agreement was signed on 9 February 2011 and has been in force since 22 August 2011.
The Indian side — read this first
For a resident individual, ODI is allowed only in an operating foreign entity that is not in financial services and has no subsidiary or step-down subsidiary the individual controls. A BVI company used purely to hold other companies is therefore generally not available to a resident individual. In addition, a person resident in India may not make a financial commitment in a foreign entity that has invested or invests into India if this results in a structure with more than two layers of subsidiaries.
The position is different for NRIs investing from foreign funds, who are generally outside the Overseas Investment Rules, and for Indian companies, which follow their own ODI conditions. Whoever invests, Indian residents disclose the holding in Schedule FA, and a company managed from India may be resident in India under the place of effective management test. See our ODI checklist.
BVI or the UAE?
If you need a bank account in the region, residence visas or a company that can trade in the Gulf, a UAE free zone company is often the more practical choice; UAE companies are subject to Corporate Tax, which pbz.ae can handle. For an NRI or an Indian group holding international investments, the BVI may still fit. See our BVI page or ask for a review.
Sources: BVI Business Companies Act, 2004 (Revised Edition 2020) and the BVI Business Companies (Amendment) Acts, 2022 and 2024; BVI Business Companies and Limited Partnerships (Beneficial Ownership) Regulations, 2024 (S.I. No. 59 of 2024), as amended; Economic Substance (Companies and Limited Partnerships) Act, 2018; Payroll Taxes Act, 2004; Council of the EU, list of non-cooperative jurisdictions for tax purposes (revision of 17 February 2026); FATF, Jurisdictions under increased monitoring (19 June 2026); Commission Delegated Regulation (EU) 2026/83; India–BVI TIEA (signed 9 February 2011; in force 22 August 2011; Notification No. 54/2011); Foreign Exchange Management (Overseas Investment) Rules, 2022, Rule 19 and Schedule III.