There are numerous reasons why a business owner would want to setup offshore company in a different jurisdiction. Some reasons include higher levels of asset protection, lower tax rates and business costs, greater ease of business transactions with foreign stakeholders and better banking infrastructure. It is important to identify your business structure and main areas of trade before you decide which offshore jurisdiction best suits your company. To provide you with a general idea of what constitutes a good offshore company, this article presents to you a list of some of the best offshore company jurisdictions for foreigners.
How to choose the best offshore company jurisdictions for foreigners?
The jurisdiction you choose should be politically and economically stable, have a good reputation and offer low tax rates. The most important consideration is that the offshore jurisdiction should be in line with your long term business goals. If you are looking for a reputable bank account, setting up an offshore company in traditional tax havens will not be recommended. If you prefer the company structure to remain anonymous, jurisdictions where company information can be found online will not be suitable.
5 best offshore company jurisdictions for foreigners
Due to its strong reputation as an international trading hub in Asia, Singapore has always been a popular destination to set up an offshore company in. Besides having a credible financial infrastructure, Singapore has also signed free trade agreements (FTA) with many countries, making it much easier and less expensive for companies to conduct trade within and outside Asia. The ease of offshore company incorporation also means that business owners can easily set up an offshore company in Singapore within one to two days. Since the primary spoken and written language in the country is English, it will be easier for business owners to manage their offshore business setup in Singapore.
Furthermore, Singapore has a competitive corporate tax rate of 17% and this is only levied on income earned from or remitted into Singapore. Properly structured, a Singapore entity can be legally tax exempt from corporate taxes. Tetra Consultants will assess your intended business activity and business structure before providing tax advice as per regulations set out by the Inland Revenue Authority of Singapore (IRAS).
For Singapore business set up, it is mandatory to appoint a local director for your company. Tetra Consultants will provide qualified personnel to be appointed as a nominee resident director for your Singapore offshore company.
Although Dubai is not regarded as a traditional tax haven like the BVI and the Bahamas, the benefits offered by a Dubai offshore company are well received by global investors and businessmen. Not only do offshore companies in Dubai offer zero corporate taxes and confidentiality of shareholders’ personal information, but they also allow for 100% foreign ownership and do not have any auditing requirements for companies in the region. The requirements to set up an offshore company in Dubai are also less stringent and there is no restriction on the nationality of shareholders or directors.
However, the incorporation of an offshore company in the United Arab Emirates (UAE) is a slightly more complex process and requires a larger amount of paperwork and a higher registration fee. Offshore companies set up in the UAE are also not allowed to conduct any form of business with locals.
Switzerland has historically been one of the world’s largest offshore financial centers due to the high concentration of local and international banks in the region, relatively low corporate tax rate of 8.5% and strong bilateral relations with most countries. Since Switzerland is a reputable offshore jurisdiction, offshore companies in Switzerland can easily expand their business in the region and engage in international trade.
Switzerland is also well known for its strong level of asset protection and strict privacy of offshore bank accounts, which can be attributed to the well-developed banking system and banking regulations in Switzerland. The privacy laws in Switzerland prevent bankers from revealing account information without clients’ consent unless there is strong evidence of criminal activity involved. The names of shareholders of offshore companies in Switzerland are also not listed on Registries of Commerce of Switzerland.
4 British Virgin Islands (BVI)
The BVI are part of the British overseas territory and are located in the Caribbean. Known to be one of the world’s most popular tax havens, many business owners choose to set up offshore companies in the BVI because there are essentially no corporate taxes or auditing requirements for offshore businesses in the region. Another main selling point is the high level of confidentiality offered, as shareholder information is not required to be published to the public.
Furthermore, BVI also has one of the most lenient requirements for offshore company incorporation. The BVI business company only requires one director and shareholder who can be the same person and be of any nationality. No other officeholder is required. There is also no minimum required paid-up capital and the official language used in documents is English. However, it is difficult to incorporate an offshore bank account in the BVI due to the small number of banks in the region and the strict know-your-customer (KYC) requirements.
5 The Bahamas
The Bahamas is another popular tax haven for offshore business setup. An offshore company in the Bahamas allows business owners to trade internationally while remaining anonymous, since information about the shareholders is kept strictly confidential. Although offshore companies in the Bahamas do not need to pay corporate taxes, all businesses in the Bahamas require a licence to operate. This business licence can be charged at a flat rate of $100 or up to 3% of turnover, based on the amount of revenue earned by the company.
Find out the best offshore company jurisdictions for foreigners
Prior to choosing the most optimal offshore company jurisdictions for foreigners, it is important to understand the latest industry insights.
The BVI and the Bahamas have been traditionally labelled as tax havens for offshore companies. While this has been the key decision-making point for many foreign entrepreneurs, it has also led to these jurisdictions becoming popular places for tax evasion. As such, global banks may be more wary about corporate bank account opening in these jurisdictions. Alternatively, Dubai provides a more safe and recognised option for foreign entrepreneurs looking to set up an offshore company but is only viable for business owners who are not intending to trade with residents in the UAE. For companies who wish to engage in local and international trade, Singapore and Switzerland may be more attractive options.
Ultimately, the best offshore company jurisdictions for foreigners will depend on your long-term business goal, the structure of your business and your main trading partners. Tetra Consultants provides you with advice on where and how to setup offshore company, and offers offshore incorporation services for over 40 jurisdictions.
If you wish to find out which offshore jurisdiction best suits the needs and goals of your company, you can contact us for a free consultation. Our team of experts will revert within the next 24 hours.
Prepared by: Lim Yi Xuan and Jessica Zhou