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.
Tax optimization does not necessarily mean to evade taxes. Breaking the law is not a wise thing to do. When seeking tax solutions, you should comply with both the laws in the incorporated jurisdiction and your home country.
You can search on Google and easily find out many places where the income tax is much lower than your home country. These places can be grouped into 2 main categories: no tax and low tax.
If you aim for the former group, you should consider everything carefully. Some no-tax jurisdictions are changing their policies fast. They are starting to impose taxes and regulations on certain kinds of income and business activities. And some places have a really bad reputation in the business world. These are the ones you should avoid.
Bad-reputation jurisdictions would cost you a hard time opening a bank account and running your offshore company. In particular, banks in Singapore or Hong Kong are very concerned about opening an account for companies in tax havens. The same goes with customers and clients. They would also be concerned to do business with your company if it is incorporated in such jurisdictions.
The pressure definitely is on choosing the right place. Incorporating in a wrong jurisdiction with unsuitable policies can cost you severe consequences and a waste of resources. That’s why thorough planning and research is a must (or at least the right consultation from the real professionals).
You open a company in the British Virgin Islands (BVI) to provide services overseas. You also establish your company’s management in another country to make it not a BVI-resident for tax purposes. These will ensure no corporate tax will be paid in this jurisdiction.
And since BVI has a fair reputation, you can open a corporate bank account in Singapore. This will allow your company to receive money from customers with ease.
If necessary, you then need to establish your tax residency in another country where you can receive your business money without being taxed.
On the other hand, there are low-tax countries. They are more stable, well-recognized, and respectful when compared to tax havens (certain tax havens are changing their regulations – we will discuss this matter later in this blog). Companies incorporated in Singapore or Hong Kong can easily open their bank accounts and do business in many other places, as these countries are known to have good reputations and well-structured legal frameworks.
Many low-tax countries adopt a territorial tax system. This means only the income generated from within these countries is subject to tax (while foreign-sourced income is not). Furthermore, these countries usually have a network of international tax treaties, which can bring you tax reduction and even exemption. These are a big plus besides their minimal tax rates.
Generally, it is a must for companies to register and maintain their profiles and data with the Company Registrar. However, you can feel secure as all information of identity would be kept confidential.
Many offshore countries shall not disclose the company’s beneficial owners, directors, and shareholders to the public, except in certain cases like a court order or international arrangements between related overseas jurisdictions.
Many jurisdictions provide an excellent cover for your assets. Besides financial privacy policies, you can benefit from the foreign judgment denial. This means, your assets are shielded against the judgment made by foreign courts. Only the court of the incorporation jurisdiction can place a judgment on the assets.
For instance, if you formed a trust in Belize, the trust’s property would be shielded from any claim according to the law of another jurisdiction. The only judgments that are recognized in Belize are those made by the Belize government. Trust is one of the most ideal vehicles for your asset protection.
Company Registration In Cayman IslandsThe offshore incorporation process is rather simple and fast. In fact, you can register a company in certain countries just within a few days. The incorporation requirements are normally very minimal.
The best thing is that many service providers out there can help you with the registration. All you need to do is find a trustworthy provider, pay for service, and supply necessary documents. They will go on and register the company on your behalf. You do not need to travel or care about the hassle of paperwork.
As for the company maintenance, it varies according to different jurisdictions. However, you can expect the reporting requirements to be very minimal too. Some countries also offer many exemptions for small businesses in regard to annual compliance. You can always get help from outsourcing services to relieve the burden of accounting or tax filing requirements.
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There is no such thing as one best offshore jurisdiction that all entrepreneurs agree on. Every offshore jurisdiction has its own set of policies and related regulations. Thus, each one brings you different advantages that fit your current needs.
We have listed out some popular countries where you should take into account for your offshore company incorporation:
Belize: If you are looking for an offshore jurisdiction with a competitive price, fast incorporation, and ease of banking needs, do not miss out on Belize in your consideration list.
Cayman Islands: Located in the western Caribbean Sea, this is a very common choice for most foreign investors who are seeking tax-free benefits.
The British Virgin Islands: BVI and Cayman Islands share many common features. But a plus is that the incorporation cost in the BVI tends to be much more affordable than that in the Cayman Islands.
United Kingdom: The UK is ranked in the top 10 nations worldwide for ease of doing business by the World Bank. A large network of tax treaties (with 130 countries) is also an advantage to consider this country.
Seychelles: The country is positioned as a place of favor for manufacturing and trading between Africa, Europe, and Asia. Incorporating a Seychelles IBC is an option to go among many choices of a tax haven.
Hong Kong: Startups, SMEs, foreign investors are big fans of Hong Kong. Two key highlights to urge business people to move to Hong Kong: Two-tier profits tax system, and its strategic location as a gateway to Mainland China.
Singapore: This is a promising destination for offshore seekers, especially fintech enterprises. Its reputation, supportive trading platforms and friendly tax regime are persuasive reasons leading Singapore to a top of choice.
Unlock our full comparison of the 20 best offshore company jurisdictions with key characteristics of each. Or, you can discover in detail the top 6 best offshore company jurisdictions for foreigners.
After finalizing the place of incorporation and having your offshore plan ready, the next step is to set up your company. Here is the general incorporation process. Please note that things may get slightly different according to different jurisdictions.
There are tons of different types of business entities. Each type will bear different key characteristics. When choosing your type of entity, you should consider the following aspects:
Bvi Companies SearchThe advice is to go for the type of company that has a separate legal status.
This allows your company to hold its own liabilities. It can enter contracts, agreements, buy and sell property, take loans, sue, and be sued in its own name. You and other shareholders/owners will not hold any personal liability that goes beyond the capital contribution.
In case your company got into big debts or even went bankrupt, the only loss you would bear is the money for capital contribution. Other personal assets would still be safe in your home country. A separate legal entity guarantees you a high degree of safety.
That said, there are still cases where you may find that a partnership or other special structures are more beneficial. And it all depends on your specific situation.
Each jurisdiction has a different set of requirements and incorporation process. Some jurisdictions advise foreigners to register their companies through the services of a licensed provider. The reason is that foreigners do not have specific tools and accounts to register on their own.
Even when it is not compulsory, you are still recommended to use an incorporation service. Of course, you can do it yourself but that would cost tons of time and effort. So why not leave the hard work to the professionals?
They have more experience and know exactly what needs to be done. The big plus is their services usually come in one package, which can help you easily satisfy all incorporation requirements.
All you need to do is find a trustworthy provider for your offshore incorporation, pay for the service, and supply required documents upon request. They will take care of the whole registration process so you don’t need to deal with hassle paperwork. No travel is needed. All can be done online.
After your offshore company is registered, the service provider can continue to support you on other post-incorporation matters such as bank account opening and tax (these are painful).
Upon the successful payment for the service, the provider will ask you to provide certain kinds of information and documents. This is known as the know-your-customer procedure (or KYC). Normally, the required documents include:
Once collecting everything needed, the service provider will start to register an offshore company on your behalf. They will proceed to file an application and submit it to the local government for approval.
If you aim to do it by yourself, you will need to file everything and submit it to the local company registrar.
Part 5: Bank Account for Offshore Company
