An "offshore trading company" is a company that is resident in the British Virgin Islands. For that reason there are no restrictions imposed on its ability to carry on business with persons resident in the British Virgin Islands. It is also not restricted from owning an interest in real property in the British Virgin Islands. If these characteristics are important to you, read on. Otherwise check out the BVI International Business Corporation.

The Act under which an offshore trading company is incorporated is the Companies Act Cap 285. The basic requirements for incorporation for a limited liability company are as follows.

• The memorandum of association must contain the following:
  • The name of the proposed company with the addition of the word "Limited" as the last word in the name. (Note that it must be fully spelled out so its usual abbreviation of "Ltd" is not acceptable)
  • The place within the Territory in which the registered office will be located.
  • The objects for which the proposed company is to be established
  • A declaration that the liability of the members is limited
  • The amount of capital with which the company proposes to be registered divided into shares of a certain fixed amount, provided that no subscriber shall take less than one share
  • The memorandum of association must be signed by each subscriber and be attested by at least one witness.
• It is standard practice for the memorandum of association to be accompanied when registered by the articles of association, which detail the particular rules and regulations for the company that the subscribers deem expedient. These must also be signed by the subscribers and be attested by at least one witness.
• The Government registration fees are:
• US$200.00 for nominal share capital not exceeding US$10,000.
• If the nominal share capital exceeds US10,000 the additional charges are US$15.00 for every additional US$10,000 of nominal capital or part thereof.

"Off-shore trading company" means a company which is resident in the Virgin Islands and has satisfied the Commissioner that

a.It carries on trade or business the gains or profits of which are chargeable to tax.
b.At least 90 percent of the gains or profits of the trade or business so chargeable arise from trading or business transactions carried on wholly and exclusively outside the British Virgin Islands.

Section 26. 3 of the Income Taxes Act states that all gains and profits of an off-shore trading company that are chargeable to tax, are chargeable at the rate of 1%.

Unlike an IBC however, an off-shore trading company must have at least two members and it must file annual returns each year with the Registrar of Companies which give details of its directors and shareholders. As a result there is no confidentiality.

There is a requirement each year to prepare financial statements although they do not necessarily need to be audited if the company is a private company. These financial statements need to be filed each year with the Commissioner of Inland Revenue.

There may be some unique circumstances where an off-shore trading company vehicle may prove to be a better option for your, but in general, the IBC is usually the better choice. Before making a final decision on one of the above options given your specific circumstances, it is wise to seek sound tax advice. Go here for detailed information for incorporating a BVI trading company through Offshore Inc.