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My offshore start up !Guide and instructions for offshore companies

Offshore business and company are the words with no definite legal or general meaning. In plain words, offshore means “anywhere other than the place of physical location of the person using this word”, in other words – overseas. Offshore business and company are mainly used in relation to the subjects such as structuring of international business and family fortune management. Utilization of international corporate or fiduciary trust structures has many reasons and advantages.

Many individuals and corporations who use offshore companies and planning aspire to:
– Reduce tax – Protect assets
– Manage risk – Enhance assets
– Maintain privacy – Reduce costs
In general, the reasons for using offshore companies for business are:
– Free remittance of profits – Access to top-rated jurisdictions
– Security of property rights – Accessing low cost areas
– Access to tax treaties – Banking privacy
– Availability of offshore experts – Access to foreign insurance
– Customs and duty exemptions – Exchange convertibility
– Enhanced privacy – Government cooperation
– Fair treatment – Territorial taxation
– Sanctity of contracts – Foreign investment inducements
– Fewer restrictions – Tested legal systems
– Higher yields and returns – Sophisticated banking facilities
– The search for political stability – Reduced taxation

Offshore companies are mainly used for:

– Trading – Investment
– Holding – Financing
– Services and consultancy – Intelectual property
– Ship management – Tax planning

Personal and corporate tax planning
company formationOffshore Company Formation is commonly used for structuring of international business and tax planning.

  • Companies incorporated in ‘tax haven’ countries offer individuals and businesses little or no tax liability which include company formation centers such as Seychelles, Marshall Islands, Panama, Dubai, etc.
  • Companies registered in jurisdictions can provide both offshore and onshore companies which may gain from beneficial tax regulations and/or uncommon company systems.
  • Companies registered in many onshore countries with laws which enable systems that are tax favorable for specific international purposes.
  • Although the world of offshore was presented by the media as black-and-white world, it is far more complex. The offshore business includes both tax havens and onshore high tax jurisdictions striving against others to attain international companies and individuals with all methods of regulations and opportunities.

These beneficial regulations are used for diverse tax planning business, such as:

  • Double tax treaty planning in relation to dividends, interest and royalty payments.
  • Formation of international head-quarter treasury, holding and finance operations.
  • Specialized business, for example, leasing.
  • Personal and family wealth management.

To stimulate inbound investments, almost all countries offer one sort of tax regulations or another.

International Business
international businessInternational Business 
Existing opportunities for improving general efficiency presented by low tax regimes offered by the high tax jurisdictions looking to encourage international business have been recognized by the international advisers for some time.
Still, in order to implement such structures successfully, a wide range of issues, frequently relating to subjects such as provisions of anti-avoidance, double tax aversion, controlled foreign company and management and control tests and stipulations, transfer pricing, narrow capitalization, participation indemnity, capital gains tax and a multitude of other ever-changing regulations.

  • Latterly, once held in the arms of the tax collectors, the weapons have now been reinforced by exchange of information treaties and provisions.
  • Nowadays, the offshore world involves skilled implementation of special tax favorable structures domiciled in high tax jurisdictions(Switzerland, UK, Singapore, the Netherlands etc).

 

WHERE TO INCORPORATE AN OFFSHORE COMPANY?

The choice among numerous offshore jurisdictions and various company types can be complicated. Each offshore financial center and entity type carries its own set of advantages, benefits and possible trade-offs. In this article, we will attempt to simplify the selection process and explain some of the fundamental characteristics of offshore companies. 

Offshore Company is a company registered for the purpose of operating outside the country of its incorporation and/or the place of residence of its principals: directors, shareholders and beneficial owners. Offshore companies offer a number of legal and tax benefits, including but not limited to low (or 0%) taxation in their home jurisdiction, anonymity for legitimate purposes and asset protection.

Similar to other businesses, offshore companies may enter into contracts, open bank accounts (including offshore accounts), buy and sell various goods and services and own property. A typical offshore company is known as an Offshore IBC (international business company). IBCs do not pay taxes in the place of registration but must also carry on business outside of their home jurisdictions.

There are 5 main criteria that we have outlined for identifying the best offshore tax havens. These are 1) incorporation and renewal costs 2) popularity 3) reputation 4) processing times and 5) proximity to offshore banking facilities.

Incorporation costs and other business fees are often the main decision criteria when it comes to identifying the best offshore jurisdiction. Offshore incorporationis often chosen for the overall lower costs of doing business; hence these fees play such an important role in the selection process.

Another important factor is popularity. The most popular jurisdictions are often the ones that have the best combination of all criteria; hence many choose to incorporate there. At the same time, there are hidden jewels or new jurisdictions such as Anguilla that are on par with other popular jurisdictions.

Reputation is another characteristic and is similar to popularity. At the same time, it reflects jurisdiction’s standing with the professional business community, various government agencies and international banks. It demonstrates the quality of relevant corporate laws and legislatures, the existence of the business infrastructure and country’s stability.

Processing times, including time to complete the offshore company formationprocess and issue various corporate documents, are another important factor. Some jurisdictions can promptly register companies, while others can quickly issue and deliver original documents. Processing times depend on the effectiveness of the local government agencies and registered agents.

Another important consideration is the proximity to offshore banking facilities. Some tax havens have a well-developed banking system, with banks offering a variety of financial services, including online banking, offshore debit and credit cards, merchant accounts and a brokerage facility.

 

 

DECISION CRITERIA:

Below, we present the decision criteria for identifying the best offshore companies in various tax havens.

Low Incorporation Costs:
1. Seychelles IBC
2. Belize IBC
3. Anguilla IBC

Popularity:
1. BVI Business Company
2. Panama Corporation
3. Belize IBC

Reputation:
1. Hong Kong Limited Company
2. BVI Business Company (BC)
3. Anguilla IBC

Processing times:
1. Nevis Corporation (or LLC)
2. Anguilla IBC (or LLC)
3. Seychelles IBC

Proximity to offshore banking:
1. Belize IBC
2. Seychelles IBC
3. Anguilla IBC

Combination of all factors:
1. Belize Offshore Company
2. BVI Offshore Company
3. Seychelles Offshore Company
4. Anguilla Offshore Company

 

 

THE BEST TO PLACE TO INCORPORATE:

Based on our experience and feedback from our clients, we identify Belize as the best place to incorporate when all relevant factors are considered. Belize has a sound banking system, relatively low incorporation and renewal fees and is popular with many retail clients and professional incorporators alike.

BVI is another pick, coming 2nd in our list. It is still one of the most reputable and most popular jurisdictions. Seychelles as one of the most affordable offshore places to incorporate is another pick. Anguilla is a new promising jurisdiction that occupies a 4th place in our list.

For further information don’t hesitate to contact author by email anelixi@ovi.com