SUMMARY OF BRITISH VIRGIN ISLANDS

[Riser Adkisson LLP]

British Virgin Islands (BVI)

The British Virgin Islands (a/k/a "B.V.I.") are a group of islands located 60 miles due east of Puerto Rico, and are adjacent to the U.S. Virgin Islands. The capital is Road Town, which is located on the island of Tortola. The BVI is a British Dependent Territory, and politically very stable.

The diving in the BVI is excellent: there is a wide variety of marine life, crystal-clear water, and shipwrecks to explore. Anegada Islands, for example, has more shipwrecks than any other Caribbean island.

The currency for the BVI is the U.S. Dollar. The BVI do not have any exchange controls, and there is no restrictions on the movement of currency funds. The BVI do not have any wealth, capital gains or estate taxes. Various acts insure privacy and confidentiality, asset security, and the free alienability and transferability of assets. The BVI also have laws to protect trust interests and inheritance wishes.

The BVI's legal system is derived from that of the United Kingdom, although the BVI have adopted many of its own laws including a corporate and tax system for nonresidents who do not conduct business in the BVI.

The typical entity formed is called an International Business Company (IBC). This entity has the following favorable attributes:

The identities of the directors and beneficial owners need not be disclosed

An IBC is exempt from all local taxes

An IBC is not required to file any records or returns with the BVI government

An IBC can purchase and own its own shares

No theory of Ultra Vires activity exists

Share capital can be issued for other than cash

The IBC is not required to file returns for shareholders, officers or directors
BVI CAPTIVE INSURANCE

Once considered a premier jurisdiction for captive formations, the BVI has since become one of the worst places to form or keep captives. In addition to many scandals involving captive insurance companies, most recently the Boston Life scandal where an ill-regulated BVI insurance company was used to scam millions from its policyholders, the BVI has become notorious for mind-numbing regulation and slow processing of applications and other matters relating to captives. The nickname for the place is "Bureaucracy Very Intense" (BVI).

TAX WARNING FOR U.S. CITIZENS

U.S. citizens are taxed on their taxable income from wherever it is derived, anywhere in the world. U.S. citizens are also taxed on investments indirectly made through foreign trusts and foreign corporations, including offshore trusts and IBCs. Thus, the fact that an offshore jurisdiction may have low or no taxes does not mean that if a U.S. citizen does business there that he or she will enjoy only low or no taxes on the personal income made. There are simply NO personal income tax advantages, at all, for U.S. citizens to use offshore structures, and anyone who tells you differently is probably telling you a falsehood. Any discussion we make of an offshore jurisdiction's tax laws should be construed only according to the foregoing warning.

BEWARE OF OFFSHORE SERVICE PROVIDERS: There are some offshore service providers who will make wild claims about saving you personal income taxes, so as to convince you to set up an offshore structure. Most of these people don't know the first thing about U.S. tax law, and their representations to you will not help you, at all, if you are caught with an unreported trust, corporation, or bank account. All they really want is your money, and even if you commit tax evasion they are not subject to U.S. law, and so couldn't care less.