BVI Annual Financial Returns: A Step Towards Transparent and Responsible Corporate Governance

The British Virgin Islands (BVI) remains one of the world’s most respected offshore jurisdictions, widely chosen by corporate groups, investment managers, private clients, and family offices for its regulatory stability and commercial flexibility.

In line with global trends towards transparency and good governance, the BVI has introduced a simple but essential requirement: the Annual Financial Return (AFR).

What Is the AFR and Why Does It Matter

Since 1 January 2023, all BVI Business Companies are required to prepare and submit an AFR to their Registered Agent within nine months of the end of their financial year.

The AFR consists of a balance sheet and an income statement in a prescribed format. This initiative helps reinforce corporate discipline, improve record-keeping, and demonstrate that entities are responsibly managed, even when there is no trading activity.

A Practical and Light-Touch Requirement

The AFR requirement is intentionally designed to be simple and manageable. Key features include:

• No audit requirement

• No obligation to follow international accounting standards

• Directors may use any major currency

• Dormant or low-activity companies are still expected to comply

This flexibility accommodates the diverse nature of BVI companies, from holding structures to IP vehicles and family investment entities.

Who Is Exempt from Filing the AFR?

Exemptions apply to:

• Listed companies on recognized stock exchanges

• Regulated entities already filing full financials with the BVI Financial Services Commission (FSC)

• Companies filing full tax returns and financial statements with the BVI Inland Revenue

• Companies already in liquidation, if the AFR wasn’t due before liquidation began

This ensures the filing requirement does not overlap with other reporting obligations and remains proportional.

Planning Ahead: Key Filing Dates

We recommend formally adopting a financial year-end and starting the AFR preparation process early. Below are common year-ends and their corresponding deadlines:

We recommend that directors formally adopt the company’s financial year-end and start the AFR process well in advance to ensure timely and accurate filing.

A Value-Added Governance Opportunity

At Segovia, we view the AFR not just as a regulatory requirement, but as an opportunity for directors and stakeholders to periodically assess the financial footprint of their offshore structures.

Even in cases where the company is non-operational, an AFR helps to affirm that proper oversight is in place, expenses are accounted for, and the entity remains compliant and credible.

This aligns well with evolving expectations of transparency from banks, regulators, and counterparties around the world.

How Segovia Can Help

Segovia offers a cost-effective, guided service for AFR preparation and submission. Our services include:

• Assistance with determining the appropriate financial year-end.
• Preparation of the AFR using the prescribed template;
• Drafting the director’s resolutions to adopt and approve the AFR.
• Ensuring compliance with submission timelines to avoid penalties.

Need Help? Speak to Our BVI Compliance Experts

If you’re unsure whether your BVI company is compliant or needs help preparing your Annual Financial Return, we’re here to assist. Our experienced team ensures your obligations are met accurately and efficiently, turning what may seem like a burden into a beneficial governance tool.

Contact us today to learn more and ensure your BVI companies remain compliant, credible, and fit-for-purpose.