At Worldwide Fellow, we provide a value-added service of assisting our Clients to open bank accounts with reputable banks or financial institutions in well over 20 jurisdictions.
The first advantage of offshore company is definitely tax optimization. In some countries, personal income or corporate income tax rates can be extremely high. As such, businessmen are looking for practical solutions to optimize their tax obligations instead of paying taxes amounting to half the company profits.
Despite the media hyping offshore companies as a multi-layer structure to illegally avoid tax and conduct money laundering, this is actually not true at all. An offshore company is actually a simple and practical solution for businesses to legally reduce their tax payable domestically and internationally. This will free up more funds for the company to reinvest and achieve higher profits.
Tetra Consultants will assist you to properly structure your offshore business according to your business needs and long-term goals while staying compliant with international tax regulations.
International business expansion
The company formation process in some countries is complex and time-consuming. By choosing to setup offshore company and opening an offshore bank account, you will be able to conduct business all across the globe. This is especially relatable to online businesses where there is no need to keep inventories or supplies in a warehouse.
In addition, registering an offshore company is quick and does not require you to meet many requirements.
For example, it is challenging to transfer funds out of Cambodia. A Cambodian businessman may choose to register an offshore company in Singapore and open a corporate bank account in Hong Kong to pay Asian suppliers and another corporate bank account in Germany to receive funds from European customers. This allows his business to grow and not be restricted by complex domestic restrictions.
In the unfortunate event that you are going through a lawsuit or divorce, an offshore holding company will protect your wealth. Assets held by the offshore company will be deemed by the law separately. In most lawsuits or divorces, you will be held liable as an individual by the law. By transferring these assets to the offshore holding company, they will be protected and out of reach. In addition, most offshore jurisdictions allow company owners to remain anonymous and not searchable in the public register.
For individuals that are residents in politically unstable countries, you may wish to consider setting up an offshore holding company to protect your assets as well. Economic markets are volatile and fluctuate rapidly. By having a company in another jurisdiction subject to different market forces and regulations, you are diversifying your risk against rapid inflation, economic breakdown, or political instability.
Lower business costs
Doing business in most offshore jurisdictions will usually result in lower costs of business operations. The company registration package service will usually consist of company registration, company secretary, registered address and corporate bank account opening. In some situations, you may require nominee director or nominee shareholder services as well as mail forwarding services. These services are usually affordable and can be provided by a single consulting firm such as Tetra Consultants.
On the other hand, highly regulated countries such as Indonesia and Thailand require the appointment of local directors and shareholders as well as foreign investment licenses which may take months to be approved. As such, setting up an offshore company for your overseas company formation is definitely cost-saving.
Access to offshore banking
By leveraging on this advantage of offshore companies, businesses are now able to open offshore corporate bank accounts. This allows you to swiftly receive and send foreign currencies while minimizing transaction fees. With access to offshore banking, your business will enjoy less delays in payment transactions and lower transaction costs.
Business Incorporation SingaporeFor online businesses, you can consider opening a merchant account for your offshore company to receive credit card payments from global clients. In some countries, domestic banks may not be able to provide this service.
In addition, you will be able to open global brokerage accounts to trade securities on global stock exchanges. This service may not be available in some of the domestic banks.
It is increasingly challenging to open corporate bank accounts for traditional tax haves. Businesses are usually subject to enhanced due diligence checks by the banks’ compliance team, resulting in delays during the account opening process. In addition, customers and suppliers are less willing to work with Belize International Business Companies (IBC) as compared to an offshore company in Singapore.
New economic substance requirements for offshore companies
Global tax authorities are clamping down on traditional tax havens in order to stop tax abuse. As such, many offshore jurisdictions are required to implement additional economic substance.
For example from 1st January 2020, all British Virgin Islands (BVI) companies dealing with “relevant activities” are required to appoint local active directors, rent local physical offices and submit annual reports to the government. This applies to holding companies, trading companies, fund management companies, shipping companies and banking/insurance companies.
That said, Tetra Consultants recommends you to set up offshore companies in more reputable jurisdictions such as Singapore, Hong Kong, UK, Ireland, Liechtenstein or UAE.
Offshore Company: A Guide to Company Incorporation
In a cross-border world, the rise of the offshore company is hard to miss. Business is becoming more and more globalised and as such, business owners and people are no longer restricted to their country of origin. In this section, we’ll take a look at offshore company incorporation, what it is, how it can benefit you, and how to go about it. Bringing you the information you need, based on our extensive work in this field will empower you to make informed decisions that will benefit you, and your business objectives.
Most of us have heard the term “offshore company” but do you really know what it means? Simply put, an offshore company is a company that is incorporated in an offshore jurisdiction. An offshore jurisdiction is one that isn’t the jurisdiction you’re resident in or hold a passport of.
Favourable conditions including structural flexibility, some level of privacy and tax-efficiency are the most common reasons for international companies to incorporate in these jurisdictions.
One key difference between an offshore company and a regular company is that the offshore company doesn’t usually conduct business activities in the country it is based in. Instead, the company conducts activities from that country, internationally.
For example, you have an online gambling business that operates in Europe and parts of Asia. Setting up your international company in Curacao but maintaining your operations elsewhere, makes it an offshore enterprise.
Some people have the impression that an offshore company may not be legal but this isn’t the case. It’s a common misconception that offshore companies are used for criminals and tax dodgers looking to hide their wealth. While there are nefarious actors in every industry, offshore companies are predominantly used for legitimate activities.
Offshore company incorporation doesn’t exclude you from the law, instead, you are bound by the laws of that jurisdiction. Matters like compliance, accounting, filing, and licensing must all be taken seriously, regardless of which offshore jurisdiction you opt for.
Firstly, you should look at the political and legal structure of the country, to make sure it is suitable for your needs. If a country is unstable or has an unnecessarily complex or unreliable legal system, it may not be the wisest choice for you. You should also be aware of what the economy is like, which industries are thriving, and what international organisations and unions that particular jurisdiction is a member of.
Singapore Company Incorporation ServicesLimitations to your company can include name restrictions and trading restrictions. Most jurisdictions have rules in place to make sure your company name is suitable, reputable, and cannot be construed as being a state or affiliated entity. Each offshore jurisdiction also has rules in place regarding what activity you can carry out. You may not be able to trade with certain countries or conduct certain activities. Be sure you know, before you start the incorporation process.
As discussed above, taxation is a very important consideration when incorporating an offshore company. How much tax you will pay on your revenue and where will ultimately be a part of your success. Likewise, being aware of any tax agreements or double taxation treaties will help you avoid being taxed twice on your income.
You should also be aware of what your obligations are in each offshore jurisdiction. You may have to submit financial statements and get audited? Do you need to disclose the beneficial owner? And how much capital do you have to put upfront? These, along with any exchange controls all need to be factored into your decision before you take the plunge.
You need to be sure the offshore jurisdiction is suitable for your needs. Knowing what you can and can’t do with an offshore company is important so you don’t waste time and money on forming an offshore company in a jurisdiction that isn’t compatible.
At Fast Offshore, we understand that every client is different and that their needs may be incredibly nuanced. Each jurisdiction has a range of pros and cons and other factors that need to be considered before a decision is made. Therefore, we invite you to Contact Us to discuss what you want and what you need. Then, using our 23+ years of experience, allow us to point you in the right direction for your offshore company formation needs.
Those that decide to incorporate an offshore company are able to avail themselves of a significant number of benefits. These range from quick set up time, flexible corporate structures, tax incentives and varying levels of privacy. Here are some of the key benefits you can expect to find in the top offshore jurisdictions:
There are many reasons why you may be looking for a high level of asset protection. If you are native to, or live in a socially, economically, or politically volatile nation, protecting your wealth is incredibly important. By placing your assets in an offshore company structure, they are beyond the reach of these factors and cannot be seized. This is important in situations and scenarios where instability within a country threatens HNWI or business people who conduct business internationally.
Similarly, asset protection is an important consideration when it comes to marital issues. Placing assets in an offshore corporate structure can prevent family wealth, heirlooms, or property being divided up by the courts. Furthermore, you can preserve your wealth from excessive taxation such as inheritance tax which can often amount to more than 50% of the value.
Offshore company formation can also protect you from lawsuits or other legal issues. By placing the bulk of your wealth and assets into an offshore company structure, you can prevent them from being used as collateral in legal action. Another popular use for international companies is the protection of intellectual property. By assigning IP to an offshore company, it makes it harder for someone to claim the trademark, copyright, or patent of your product or idea.
International company incorporation comes with many fiscal benefits for the owner. But it is important to make a distinction between tax avoidance, which is illegal, and optimised tax planning, which is not. Having an offshore company is not about hiding assets or avoiding paying what you are due, it’s about using international laws to your benefit.
Tax optimization is a popular way of limiting company expenditure and creating additional profit. If a company benefits from a lower tax rate, the more funds the owner has to reinvest into expanding the business. Finding a jurisdiction which provides optimum tax rates is a smart business strategy for international businesses.
Tax efficiency is where a company attempts to minimize the amount of tax liability they incur. A decision is ‘tax-efficient’ when the outcome is lower than a similar decision in another less tax-efficient jurisdiction. Offshore companies are a great way of achieving both tax optimization and tax efficiency in a legal and regulated way.
Incorporating an offshore company is often more simple than many think. Offshore jurisdictions usually offer quick incorporation times, favourable costs, and straightforward ongoing maintenance requirements. In addition to this, many jurisdictions offer flexible regulations when it comes to accounting and public filings.
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