Setting up a Company in Offshore Jurisdiction

Transcription

1 Setting up a Company in Offshore Jurisdiction Incorporating a company in an offshore jurisdiction will bring numerous benefits to its owner. Offshore organizations enjoy significant tax relief, complete privacy, simplified administration system and many other advantages being organized within the law in a politically stable and financially advanced country. When moving a business off the shore some specific features should be considered and certain type of data should be processed in order to get maximum benefits. This guide was designed to provide you with all the relevant information highlighting such points: 1. The truths and myths about offshore companies 2. Who is eligible to set up an offshore corporation? 3. Choosing the right type of an offshore company 4. Choosing the correct offshore jurisdiction

2 The Truths and Myths about Offshore Companies Principally the word offshore has a negative meaning in a global business environment. Usually one may think about illegal money-laundering methods, drug and arms trafficking, and the activities of terrorist groups when encountering the term. Thus any offshore company is considered to be an illegal entity engaged in destructive and deleterious activities. But this perverted misperception has nothing to do with the truth. The reason of such ill fame lies in the fact that most of global authorities fight against outflow of national capital to tax havens. Huge corporations like Google and Apple as well as smaller companies store their capitals abroad in friendly environments of offshore jurisdictions having a chance to legally avoid exorbitant taxes. Here are some real facts refuting such widespread misconception: Offshore companies are legal entities incorporated in jurisdictions which provide significant reduction of tax deductions, protect owner s confidentiality and privacy of company s operations. Offshore company creation is welcomed by such global financial organizations as the World Bank, WTO, OECD and corporations involved in the international trade. Another misconception is associated with the incorporation process. Many people think that starting up an offshore company is extremely inextricable and expensive. But nothing can be easier and more pleasant then setting up an offshore entity with our Offshore Express Company. You don t need to spend days and weeks seeing into numerous laws and features of various jurisdictions, finding information on how to correctly incorporate and to run an offshore company and taking high risk of failing the undertaking. We have extensive experience in the field of offshore company creation an opening corporate bank accounts and our skilled team is able to suggest the most relevant solution featuring your specific needs. We run the process from the very beginning and maintain the company during its existence being responsible for all the documents and reporting issues. Of course the service is not free but your saved time and obtained benefits are worth that. The cost of the service takes mere fraction of your future gains. Many business people from around the world availed of such incorporation type having got the opportunity to improve companies financial indicators, safely protect the assets and to significantly simplify accounting and reporting systems. 2

3 Who Is Eligible to Set up an Offshore Corporation? There are many people who may potentially increase their revenues and gains when organizing a non-resident company and opening an offshore bank account for commercial and other activities. Find below the information concerning who and how will benefit if setting up a company in a tax heaven. 3

4 International companies owners Most of modern international corporations performing their products or services on the global market are registered in offshore jurisdictions. Significant tax reduction is the main benefit for such corporations. An income tax levied on offshore companies usually varies between 5% and 20% depending on the jurisdiction. Corporate income may even stay untaxed in some areas. Such rates significantly differ from 39% US tax rate, 27% Norwegian rate, and 25% China s rate. So moving your international business to an abroad country which provides tax benefits to foreign corporations is an effective and reasonable solution. Online business owners One of the main advantages of web-based businesses is the ability to achieve the abroad target market and to be globally performed. If you find a ready market abroad then your company may become global either. It goes without saying that having an offshore bank account will provide your company with convenient way to get payments. Besides, being under jurisdiction of a country with healthy political and economic environment will help to protect your money from depreciation and losses caused by irrelevant tax system, inflation and economic crisis of your resident country. 4

5 Property owners It doesn t matter whether you want to purchaseе moveable property, such as a car or a yacht, or immoveable property, such as real estate, offshore company will help you to reduce transaction costs. Apart from enjoying property tax reduction you will avail of opportunity to hide your ownership from public access. It is out of importance to choose an appropriate jurisdiction and to make sure that you don t break the law of the resident country. Many authorities prohibit property movement through offshore company s balance sheet. For example, American law doesn t protect your property which is located within the US but registered on the name of an offshore company. Nevertheless many offshore jurisdictions avoid entering into information sharing agreement with other countries and your ownership may be completely anonymous. Pay attention that there are jurisdictions suggesting benefits to specific property owners. Thus Delaware and Malta are used for ships and yachts registration because countries authorities provide real benefits for such activities. 5

6 Inheritance recipients and wills participants It is very convenient to offshore a company in case you don t want to pay high taxes on inheritance or when becoming property owner as a result of the will. This is especially good option in case testator and heir live in different countries. Why do you have to give away a part of your property to the government when you have been giving away essential amount of your income under the pretext of tax? Service providers Forex traders and stockbrokers Consultants, counselors and especially financial service providers avail of simplified requirements to reporting and accounting when establishing a company in offshore jurisdictions. It is very easy to manage such companies and to optimize profits due to loyal tax system. Financial service providers have opportunity to avail of developed financial system featuring the latest achievements in the field. Brokers and traders have an opportunity to stay anonymous when committing transactions with securities. Offshore company allows preserving privacy while trading stocks and shares under the name of a legal entity. Intellectual property owners Entrepreneurs It is easy to hold and to sell intellectual property registered in the name of offshore entity. Thus you can easily sell the rights on a trade mark or a patent as well as to grand them. Simple entrepreneurs may also benefit from offshoring a company. This is not just a lucrative opportunity to reduce amount of tax deductions and to enjoy simplified management and reporting but also an opportunity to start a business in the most simple and fast way. 6

7 Choosing the Right Type of an Offshore Company It is possible to register different types of offshore entities and jurisdictions usually provide opportunity to create certain types of companies. There are 5 of them and each type has unique features and benefits. International Business Company (IBC) International Business Company is organized similarly to a private limited company. In both cases issuing shares is allowed and charter capital contains share capital. Shares cannot be publicly sold. Management of the companies is carried out by the board of directors. But IBC is not allowed to perform commercial activities within the jurisdiction of incorporation. This is the most popular type of offshore companiesbecause of numerous benefits it provides to business owners. This is the reason why there are so many IBCs world over. Among the benefits are: When setting up an IBS you can choose any suffix forits name including Incorporated, Inc, Ltd, Corporation, Corp, S.A. The suffix you may use depends on jurisdiction and not all of them provide the opportunity to take any of these names. But different jurisdictions provide specific laws regulating IBSs incorporation and activity so it is reasonable to spend some time on investigation and choosing the most suitable area. Private Limited Company (PLC) This type of business organization is used not as often as IBC. Confidentiality here is not as high as in the first type. Besides there are basic requirements to accounting and reporting; auditor might check your company. PLCs should pay insignificant amount of taxes to the jurisdiction s government. Commercial activity is marginally restricted. The company is allowed to have 1 director and 1 shareholder. It can be one and the same person. There are no strict requirements to accounting. While company s books are supposed to be kept you are free from any audits. Taxes are not levied on IBC. It just has to pay annual fees varying between $100 and $600. Despite all these drawbacks PLCs allow nominee directors and shareholders and this is a great opportunity for real owners to stay anonymous. Some offshore areas provide opportunity to register Sociedad Anónima (Uruguay, Panama), Société Anonyme (Switzerland, Monaco), Aktiengesellschaft (Liechtenstein) but all these are variations of PLC. 7

8 Limited Liability Company (LLC) Société à responsabilité limitée (SÀRL) It is also possible to set a Limited Liability Company as an offshore entity. You can register LLC within the law of such countries as: USA (Delaware), Nevis, Anguilla and Marshall Islands. Some other jurisdictions provide different names for such type but requirements to organizational structure stay the same. Thus, in Belize you can register a Limited Duration Company, but the company is allowed to exist for only 50 years. In Panama and Costa Rica you can register a Sociedad de Responsabilidad Limitada, which is a Spanish equivalent. SARL is a type of business organization developed by the French. It doesn t use the principles of English common law but was developed on the basis of the German Gmbh. SARL is similar to Limited Liability Partnerships used in the USA and Private Company Limited by shares used in UK. Portuguese also have equivalent of SARL named Sociedade anónima de responsabilidade limitada. Such types of business organization may be found in other jurisdictions such as Monaco, Switzerland and Madagascar. Global Business Company (GBC) You can register a Global Business Company only in Mauritius and there are two types of such organization: Class I GBC and Class II GBC. Class I GBC is a type of business organization available to Mauritius residents. Such companies are not levied with an income tax or pay only a 3%-rate. The company should have at least one director physically present in the country and to keep books. Class I GBC s owners may avail of tax treaties which Mauritius has with certain countries if these countries are commercially interesting. Class II GBC is similar to IBC and is available for abroad investors and business owners. 8

9 Choosing the Correct Offshore Jurisdiction To decide in which country to register your offshore company, specifics of various legislations should be analyzed and considered while taking into account your business needs. Except of this there are some other important points to consider: Jurisdiction s reputation, relationships with other countries and mutual agreements Political stability, economic flexibility andinnovativeness Country s official or business language Don t forget to pay attention to jurisdiction sreputation because it may influence your future business performance. Setting up a company in the Seychelles is not as acceptable as setting up one in Switzerland. Though Switzerland, UK, Hong Kong, Ireland and Singapore are not offshore jurisdictions in the full sense of the term they still provide tangible tax benefits, stable business environment and good reputation for your business. Level of technical progress Level of bank secrecy Taxation is one of the main points which should be analyzed when choosing a jurisdiction for your offshore as different countries provide various regimes. Complete tax exemption is provided by many areas however you may have to pay tax amounting to 1 to 10 per cent of your income. In UK, Hong Kong, Gibraltar and Cyprus accounting and yearly reporting is mandatory. It makes sense to find out whether you have to pay any taxes and duties in your domicile country even if the jurisdiction where you are going to set up a company exempts you from such obligations. It is better to take a consultation from tax advisor or lawyer in your country. 9

10 It is better to trust setting up your offshore company and choosing a jurisdiction to experienced team of Offshore Express. When choosing a destination for your business without the help of professionals you risk to lose possible gains and even to incur losses. Visit our site ( to discover benefits and specific features of the most popular and attractive offshore jurisdictions such as: Hong Kong, Cyprus, Delaware, Seychelles, United Kingdom, Belize, Mauritius, Switzerland, Gibraltar, BVI, Panama and Saint Vincent. To get more detailed information or consultation from professionals you can: contact us through the form on the website, send an to [email protected] request a callback call us by the phone (French) (English) 10