No new captives have been formed in the Virgin Islands in the past three months, according to statistics released by the country’s Financial Services Commission.
There are over 150 captives domiciled in the islands, but growth in the sector appears to have stalled in Q3.
General company incorporations in the islands fell by 1.3 percent during the first six months of 2013 compared to the same period in 2012.
The Virgin Islands adopted captive legislation relatively early. The islands passed the Insurance Act in 1994, together with the Insurance Regulations Act of 1995. The islands are tax-neutral, as they don’t add extra layers of taxation to that paid by a parent company in its home country.
With several new states writing captive legislation this year the industry is becoming increasingly competitive.
Another reason for the decline may be the Virgin Island’s popularity amongst companies wishing to form pure captives. The large capital requirements mean that this is an option only available to the largest corporations, the vast majority of which now have captive structures.
