Navigating the new BVI Financial Annual Return requirements - FAQs
Starting from 1 January 2023, all BVI Business Companies have a new task on their to-do list - preparing and submitting a Financial Annual Return (FAR) to their Registered Agent. This comes into play nine months after the end of each company's financial year end (FYE).
In light of this new requirement, we've put together answers for the most common questions we've been asked in the past year. If you cannot find the response to your query or require assistance with accounting services, please email us at ClientAccounting@harneys.com.
What is the BVI FAR?
Subject to limited exceptions, from 1 January 2023 BVI Business companies are required to provide certain financial information to their registered agent on an annual basis in the form of a FAR.
This is a simple Income Statement and Balance Sheet. You can see the template here.
The first Financial Year End (FYE) due for submission will be from 31 December 2023 onwards.
Which companies are exempted from submitting a FAR?
The following entities are exempt from FAR filing requirements:
- Entities listed on a recognized stock exchange
- Entities regulated by the BVI Financial Services Commission (FSC) which are already required to submit accounts
- Entities which file annual tax returns and financial statements with the BVI Inland Revenue
- Entities which are already in liquidation when their annual return is due, ie if the company makes its liquidation submission to the BVI Registrar prior to the end of its financial year
Are dormant companies and pure equity holding companies exempted?
No, they are companies are not. All BVI business companies will need to submit their FAR unless they fall into one of the exemption categories mentioned above.
Are BVI-approved managers entities exempt?
In most instances, yes. BVI-approved managers, which are regulated by the BVI FSC and submit Financial Statements to the FSC, are not required to file a FAR.
How to determine the FYE of a BVI company?
The FYE is determined by the directors, and an entity can have any date as its FYE in accordance with its operations/group requirements. The FYE should be recorded in a board resolution, and the Registered Agent of the Company (ie Harneys Fiduciary) needs to be informed.
My company already prepared management accounts. Can I submit those?
No. BVI Companies need to submit the FAR template, as released by the authorities. Financial Statements/Management Accounts in other formats will not be accepted.
When is the first FAR due date for submission?
The first FYE due for submission is 31 December 2023. If a company has a FYE on 31 December 2023 the FAR for the 2023 financial year will need to be submitted by 30 September 2024.
Are FARs required for the FYE 2022?
The FAR is not required for the FYE 31 December 2022. First submissions will take place in 2024 for financial periods starting on 1 January 2023 or thereafter.
My company’s FYE is 30 June 2023. When do I need to submit the FAR?
If a company has a fiscal or financial year that does not correspond to a calendar year, your first FYE will fall within the period when your fiscal year began. For example, a Company with a 30 June FYE will have its first financial period under review from 1 July 2023 to 30 June 2024. This Company will have until 31 March 2025 to file its first FAR.
Where and how I can submit my FAR?
For clients who prepare their FAR themselves or through external accountants the submission needs to be made to their registered agent. If Harneys Fiduciary is your Registered Agent we will send relevant communication on how the submissions will take place.
How can Harneys help me to complete the FAR?
Our specialist Accounting Services department consists of qualified, experienced professionals who are well aware of the new requirements and are ready to assist. We can help you with the preparation of your entity’s accounting records, financial statements, and completion of the FAR. For more information, please contact our team directly at ClientAccounting@harneys.com.
What additional documents should I submit with the FAR?
There is no need to provide additional documents (ie, Financial Statements, invoices, etc) along with the FAR. The FAR will need to be submitted as shown in the template and variations such as Financial Statements or other financial documents will not be accepted.
Does the FAR needed to be signed by an authorised person (ie director)?
No, as the requirement stands, the FAR is not required to be signed.
Should the information in the FAR be based on the consolidated or stand-alone Financial Statement?
The FAR needs to be completed on the standalone numbers for the BVI company and not consolidated figures.
Do audited Financial Statements need to be submitted?
The submission needs to be done on the FAR template released by the BVI FSC. You can find the template here. Audits are not required as part of the FAR requirement.
Is the FYE and Economic Substance reporting date the same?
No. The Economic Substance reporting deadlines vary based on when the company was incorporated or if the Company has elected to have a specific period for its reporting period, ie the calendar year.
The requirement for the FAR is to submit within nine months after the FYE.
If you wish to align both reporting periods and Harneys Fiduciary is your Registered Agent, please contact your usual Harneys administrator and we can help arrange this.
Are Companies in liquidation exempted?
Exempted are companies which are already in liquidation when their FAR is due. This means that the Company doesn’t have to submit FAR if it submits its liquidation documents to the BVI Registrar prior to the end of its financial year.
Are there prescribed accounting policies or principles that need to be followed?
There are no prescribed accounting policies or principles under which the FAR needs to be prepared. Any reputable accounting standards can be used for the preparation of the FAR.
Are submitted FARs open to the public?
When you file the FARs with the Registered Agent, the information remains confidential and under the control of the agent. They are responsible for sharing the information with valid requests from the BVI Competent Authorities.
Which currency can be used for preparing the FAR?
Any major currency may be used for preparing the FAR.
Do FARs need to be audited?
No, the accounting records of your entity do not need to be audited for this FAR.
If my entity held a regulatory license which has been recently cancelled do I still have to file a FAR?
If the entity has not filed financial statements with the Regulator for a financial year and the FAR is due for that financial year then it has to submit the FAR to its registered agent.
My entity is dormant. Can I make an all-zeros submission?
BVI Companies usually have share capital, and operating expenses such as annual government and registered agent fees, which need to be reflected on the return, therefore an all-zeros submission is not expected, nor encouraged.
What are the consequences of not complying with the FAR requirement?
If a company does not file its annual return on time, the Registered Agent must notify the Registrar within 30 days of the date the annual return was due.
As per current guidance, a company which fails to file the FAR on time will be liable to a penalty of US$300 for the first month after the FAR was due, and for each month thereafter, the penalty shall be US$200 per month up to a maximum of US$5,000. Where a company is liable to the maximum penalty, the Registrar may also strike the defaulting company off the register. Non-compliance will be reflected on a company’s certificate of good standing.
Questions? Please contact us at ClientAccounting@harneys.com.