A lot of our clients main concern, where is the best jurisdiction to set up their offshore company in 2021. There are many factors that we have to take into consideration, before we choose where to set up the offshore companies. It is very difficult to get a definite answer, this has given us an opportunity to walk you through useful tips to consider your best-suited offshore jurisdiction as well as some recommended options for your!
Factors to consider when offshore jurisdiction!
Reason to Incorporate
What are you expected offshore company to benefit you?
Does the jurisdiction chose meet your needs?
Reputation
How recognised the offshore jurisdiction by the banks?
Is the offshore jurisdiction has a stability and soundness economy, politics, legislative system and corporate laws?
Taxation
Is the chosen offshore jurisdiction has any tax obligation, if yes, what is the corporate income tax rate imposed?
Could you get any relief or tax benefits for your offshore income?
Are there any tax rules specifically associated with offshore companies?
Cost
How much the incorporation cost and the maintaining cost, if the cost is high and it does not save you much from your tax.
Is there any other cost relating to the compliance and tax, such as maintaining an economic substances in the offshore jurisdiction.
Compliance Requirement
Is there any compliance that you have to take into consideration?
Is there any economic substances requirements, such as hire local staffs and operating office, which make the total cost increased.
Do you need to have a local proxy as director or shareholder, which makes your operating risk and cost high.
Under CRS, your offshore company account will exchanged with your taxpaying country, how best the offshore company deal with that?
Best Offshore Jurisdiction for Foreigners in 2021
Based on the above factors, we have summarised 5 offshore jurisdictions that are suitable for foreigners.
1. Hong Kong Company
Hong Kong is top-listed as an ideal country for offshore company formation. Countless things can be mentioned when it comes to the strong international reputation of Hong Kong:
Allow 100% of foreigner’s ownership
Offer an excellently business-friendly tax regime: Free corporate tax for foreign-sourced profits, low tax rate from 8.25% to 16.5%
Free sales tax, capital gain tax, dividends, and interest tax
No exchange controls
Open trade policy, competitive economy, the independent legal system
The international financial mecca where to concentrate 75 out of the 100 largest banks in the world
Ease of access to the growing market of mainland China
Among many choices, Limited Company is the most common type of business entity in Hong Kong. It is widely chosen by most start-ups, entrepreneurs, and those looking for international trading business.
The Pros of setting up a Hong Kong company are:
Limited liability of the shareholder, up until their respective shareholdings
The company can enter contracts, acquire assets, sue or be sued under its own name
It is widely recognisable and easier to open a bank account.
No economic substance requirement, can save tons of unnecessary cost.
Relatively lower tax, which starting from 8.25%.
The cons of Hong Kong company are:
The company is required to fulfil the compliance requirements on an annual basis with CR and IRD.
Information of the shareholders and directors can be searched by public.
Potential politics pressure from China government.
2. Singapore Company
Singapore is another fast-growing commercial center in Asia. This is the promised land for start-ups, entrepreneurs as well as investors in respect of commodity trading and wealth management. Below are a few key highlights:
Reputation creates Singapore’s trustworthiness
Transparent tax scheme: Only businesses conducted in Singapore are taxed; the corporate income tax is capped at 17%, which is much more competitive than that in other jurisdictions
The availability of over 70 tax treaties concluded between Singapore and foreign jurisdictions
Partial tax exemption schemes and various incentives for startups and investors, especially in fintech and technological innovation industries
One of the world’s top-notch banking systems
High-skilled workforce, beneficial visa schemes for foreigners
A private limited company is the most popular option to incorporate in the city-state. Either individuals or body corporate can be shareholders of a Singapore private limited company. Further features of this business structure are as below:
Limited liability of the shareholder, up until their respective shareholdings
The company can enter contracts, acquire assets, sue or be sued under its own name
It is widely recognisable and easier to open a bank account.
No economic substance requirement, can save tons of unnecessary cost.
Partially tax exemption for first 3 years of the company.
“Small company” will be exempted from annual audit.
Cons of setting up a Singapore company:
The company is required to fulfil the compliance requirements on an annual basis with CR and IRD.
Information of the shareholders and directors can be searched by public.
3. Seychelles Company (IBC)
As with most of the other main offshore jurisdictions, a Seychelles Offshore Company (IBC) is a tax-free company designed for engagement into all forms of international business, with no reporting and minimum record-keeping requirements, as well as comprehensive confidentiality features.
A Seychelles company formation is one of the most popular types of Offshore Company Formation and is an easy, straightforward process to set up.
The pros of setting up a Belize company are:
Limited liability of the shareholder, up until their respective shareholdings
The company can enter contracts, acquire assets, sue or be sued under its own name
Widely recognisable, easy to open bank account
Tax free
Directors and shareholders information are confidential, undisclosed to the public, unless in obedience to a court order or enforcement by laws
Flexible Corporate Structure
No Economic Substance Requirement
The cons are:
It is under blacklist from EU council, however it has no issue to open bank account out of financial institution of EU.
4. Belize Company (IBC)
Belize is a golden site for overseas businesses, high net worth individuals and international investors to move offshore. Belize company formation is set at a competitive price, swift incorporation process in combination with a set of preferable privacy policies and tax benefits for non-residents.
What can make you attracted to Belize offshore jurisdiction?
Among the top highest per capita income in Central America, proving its economy health
USD as an official currency
Tax exemption on overseas income
Simple and straightforward incorporation process
No accounting requirements or tax return
High level of confidentiality and privacy in terms of records of directors and shareholders, and account related information
The prominent banking sector to support for businesses: high liquidity ratio of banks, remote bank account opening, low deposit, et cetera
International Business Company (IBC) is the most commonly used type of business structure for foreigners to Belize. This offshore location is considered to be among the fast IBC Registry. It normally takes only 1 to 2 days to incorporate a Belize IBC, or even in just a few hours.
Belize IBCs are a low-tax entity. Not only is Belize IBC set up with a favorable incorporation cost, the fixed annual fee to the Government that you need to submit is also fairly competitive compared to the required amount from many other offshore countries.
The pros of setting up a Belize company are:
Limited liability of the shareholder, up until their respective shareholdings
The company can enter contracts, acquire assets, sue or be sued under its own name
Widely recognisable, easy to open bank account
Tax free
The cons:
Subject to economic substance, in scope activity is subject to certain reporting requirements as well as subject to tax.
5. British Virgin Islands Company (BVI)
British Virgin Islands is a well-known tax haven and financial offshore jurisdiction. The reasons behind the attractiveness of the BVI maybe its ease of setting up a company and its cost-effectiveness in comparison with the company incorporation in other offshore locations like the Cayman Islands.
In addition, there are some other pull factors that make the BVI become one of the top pick offshore jurisdictions:
Tax exemption for profits derived outside of the BVI
Ease of doing business and banking
USD as an official currency
No currency exchange control
No annual meeting requirements
No financial statements, annual return requirements
BVI Business Company (BVI BC) is considered to be the most popular vehicle for foreigners seeking offshore investments, international trade, savings, corporate banking, estate planning, and other purposes. A BVI BC can enjoy favorable tax benefits and reduced compliance requirements by virtue of the islands’ business-friendly offshore environment.
Unlike Hong Kong and Singapore, where the publicity of identity information is a key requirement, offshore countries like the BVI are highly confidential. A BVI BC’s relevant details of the beneficial owner, directors, and shareholders are guaranteed to disclose with the competent authority (the Registrar) and the Registered Agent only, but not made publicly available.
Conclusion
It is always a wise decision to do a survey of the offshore company that suit your need the most! It is also crucial to invest your time to understand your choice, consider relevant factors (the jurisdiction’s reputation, trustworthiness, tax policies, compliance requirements, et cetera), and then narrow down the list to reach the best-suited option.
To save time and resources, you can also engage a professional offshore service provider to get practical advice on your specific needs and circumstances. EWO Consulting has had years of experience in offshore incorporation services. Our expert team has worked through thousands of cases with our clients across the globe. We aim at simple, fast, and transparent services for our clients in setting up their company overseas!