In an era where there are a lot of different countries and jurisdictions that offer numerous advantages in terms of corporate structure and tax regulations, choosing the best country to set up an offshore company might pose a challenge to some.
Setting up an offshore company may help your business develop and reach new markets, whether you operate a start-up or a major corporation. Offshoring is largely concerned with saving money by relocating activities to a less expensive place abroad. This enables you to reinvest the money you’ve saved into growing your business. But which country is the best for forming an offshore company?
WHAT ARE THE KEY CONSIDERATIONS I SHOULD KNOW OF WHEN IT COMES TO OFFSHORE JURISDICTIONS?
There are several factors to consider before deciding on the optimal location for your offshore company. Among the key considerations are as follows: –
Reason for incorporation
What are the projected benefits? Does the offshore location fit your requirements?
Jurisdiction track record
Does that offshore location have a stable economy, politics, legislative system, and business laws? Is it included on the EU Council’s “blacklist” or “grey list”?
Tax regulations
Is there any particular taxation or exemption status imposed on offshore companies? In what conditions may your company be taxed?
Corporate structure
How many types of corporate formats are there? Is it legal for you to incorporate your preferred structure (e.g., IBC, LLC, Pte, or Ltd) in that jurisdiction?
Cost of incorporation
How much does it cost to incorporate in your preferred offshore location? Which nations have the cheapest incorporation fees?
Compliance requirement
What are your company’s reporting obligations if it conducts business in that offshore jurisdiction?
Corporate banking
Do you need a corporate bank account in that country to conduct your business? What are the local and international banking choices available? Is it possible to open offshore debit or credit cards, merchant accounts, or cryptocurrency accounts through the country’s banking system?
WHAT ARE THE RECOMMENDED COUNTRIES FOR THE SET-UP OF AN OFFSHORE COMPANY?
Relin Consultants’ top 6 recommendations are listed below.
Hong Kong Offshore Company
Hong Kong has long been regarded as a favorable tax jurisdiction. Companies can be used for international trade without paying tax in Hong Kong if they are properly structured and managed. This is on the condition that no money is generated in Hong Kong. Below are the key features of a Hong Kong offshore company: –
No corporate tax on earnings earned abroad, and tax rates range from 8.25% to 16.5%.
There is no sales tax, capital gains tax, dividend tax, or interest tax.
Gateway to Mainland China
Pros
- The liability of a shareholder is limited to the number of shares owned.
- Any change in the company’s stockholders has no effect on the company’s existence.
- Under its own name, the firm can engage in contracts, acquire assets, and sue or be sued.
- Transferring ownership can be accomplished whole or partially by selling or releasing the shares.
Cons
- The names and addresses of shareholders and directors must be made public.
- The upkeep and dissolution of a Hong Kong limited corporation are both challenging.
Singapore Offshore Company
Singapore is another rapidly rising Asian commercial hub, commonly known as the promised land for start-ups, entrepreneurs, and investors in commodities trading and wealth management. Below are the key features of a Singapore offshore company: –
- Only Singapore-based enterprises are taxed; the corporate income tax is set at a competitive rate of 17%.
- There are more than 70 tax treaties between Singapore and international governments.
- Tax breaks and other advantages for entrepreneurs and investors, particularly in the FinTech and technology innovation industries
Pros
- Shareholders’ responsibility is restricted to the value of their shares, as they are not personally liable for the company’s obligations.
- Any change in membership does not affect the company’s existence.
- The ownership can be transferred whole or partially by transferring to another person.
- Many tax options are available to the corporation for tax minimization.
Cons
- Abiding with the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS)
- Accounting and other essential records should be kept up to date.
British Virgin Islands (BVI) Offshore Company
The British Virgin Islands, often known as BVI, is one of the world’s oldest and most prestigious offshore financial centers. The appeal of the BVI may be due to its simplicity of incorporation and cost-effectiveness compared to other offshore jurisdictions. Below are the key features of a BVI offshore company: –
The BVI company offers a great deal of flexibility in terms of corporate structure.
A BVI Business Company is not required to submit compliance or corporate obligations such as auditing requirements, financial accounting filings, annual general meetings, etc.
A business corporation is legally recognised in the British Virgin Islands. It is regarded as a distinct legal person with the same abilities as a natural person.
Pros
- The British Virgin Islands (BVI) has created a regulatory sandbox to encourage BVI firms and other initiatives to develop and employ innovative FinTech in a low-touch regulatory environment.
- The British Virgin Islands have never been prohibited from establishing offshore firms by the Financial Action Task Force (FATF) or the Organization for Economic Cooperation and Development (OECD).
- No corporate and income tax.
- BVI corporations are not required to reveal information about their officers, directors, owners, or shareholders.
Cons
- It will take some time to be completely set up and have workers in the British Virgin Islands.
- Each entity must satisfy specific standards to comply with the new economic substance rules.
Cayman Islands Offshore Company
The Cayman Islands is a popular offshore hedge fund and offshore company site. Cayman LLC is also an excellent choice for businesses seeking asset protection, investment funds, private equity transactions, securitizations, ownership of moveable or immovable assets, etc. Below are the key features of a Cayman Islands offshore company: –
A British overseas territory is known for its political and economic stability.
A robust regulatory framework is overseen by the Cayman Islands Monetary Authority (CIMA).
There are no corporate, property, capital gains, or withholding taxes.
Pros
- Documents such as corporate finances, meeting minutes, and other information are kept private and are not required to be registered with the government.
- All paperwork and legislation are written in English, as it is the Cayman Islands’ official language.
- Its registration and renewal fees for offshore companies are cheaper than in other nations.
- The corporation is allowed to utilize its share premium account to support dividend payments to shareholders as long as it remains solvent after such payments.
Cons
- An exempt company may not conduct business in the Cayman Islands. Exempted companies, on the other hand, are permitted to conduct foreign trade through a local corporation.
- Foreigners may only buy Cayman property through a regular non-resident business, not an exempted company. This raises the administration costs associated with owning real estate in the Cayman Islands.
Belize
Because of its high-interest rates, Belize is an excellent choice for opening an offshore or merchant bank account. Below are the key features of a Belize offshore company: –
Prompt incorporation, often within one business day. Central America’s per capita income is among the highest in the region. The official currency is the USD.
Pros
- All local taxes are waived for offshore enterprises.
- High level of security and privacy in terms of director and shareholder data, as well as account-related information.
- The major banking sector to help companies includes high bank liquidity ratios, remote bank account opening, and cheap deposit requirements.
- The documentation required for company formation can be provided in English, reducing translation expenses.
Cons
- Doing business in Belize is more expensive than in neighbouring South American countries.
- Companies seeking a tax exemption certificate and non-resident status must demonstrate economic substance and tax residence in the jurisdiction in which they conduct business.
Ras al Khaimah (RAK)
RAK is one of the United Arab Emirates seven fastest-growing emirates. RAK is a popular location for international investors and business owners. Below are the key features of a Belize offshore company: –
Rapid incorporation in one or two working days.
There is no requirement for a specific currency to be utilized as the company’s capital.
There are no restrictions on bank transfers or deposits for share capital.
Pros
- A foreigner is allowed to have full ownership.
- Tax neutrality for earnings derived from overseas sources
- There are no obligations for yearly reporting or accounting.
- Confidentiality of the company members’ registry is guaranteed.
Cons
- An offshore RAK company is not permitted to do any business within the UAE.
- It is also not permitted to rent local premises or hire local employees.
WHICH COUNTRY IS THE BEST OPTION FOR THE FORMATION OF MY OFFSHORE COMPANY?
There is no one-size-fits-all answer regarding the best country for your offshore company, as each country offers different advantages and challenges for offshore companies. A summary of the main benefits for each country mentioned above is as follows.
Depending on the nature of your business, the best country for the incorporation of your offshore company might vary from others. To find out more, contact us at +65 8756 2027. Our consultants at Relin Consultants will guide and assist you in choosing the best possible country for your offshore company.
FAQs
1. What exactly does an offshore company mean?
An offshore company is formed in a jurisdiction other than the one in which the beneficial owner lives. In other words, an offshore corporation is simply a company that is formed overseas, in a foreign jurisdiction.
2. Are offshore companies legal?
Establishing an offshore company is not a crime under the law if the corporation is not involved in any illicit activity. Those who have not reported these entities as assets on their tax filings, on the other hand, may face legal action.
3. Do all foreign countries have the same regulations for offshore companies?
No, each country has a different set of rules and regulations when it comes to offshore companies. Therefore, it is crucial for business owners to do their research and seek advice before incorporating their offshore company.
4. How do I set up an offshore company?
You can set up your offshore company by first contacting us at +65 8756 2027. Our consultants will work towards introducing a Doing so, it will ensure that the whole registration process is done properly, which can ensure the success of your company’s set-up.
