To this day, many attribute an offshore company to illegal activities due to a huge leak a few years ago. Still, there are plenty of legal reasons to set up one. After all, it provides a lot of benefits to corporations and to the country itself.
Offshore entities are not illegal, and an ordinary don’t set it up to do illegal activities. It provides some asset protection and it allows you to buy properties in the country.
However, countries don’t provide equal benefits; there are some that stand out. Read on to find out the top 5 countries for offshore corporations.
1. Hong Kong
Hong Kong, while a part of the People’s Republic of China, has a legal system that follows the English common law. It provides the greatest incorporation benefits among all other Asian countries, from the company registration to taxation.
It has low incorporation fees and a corporate tax rate of 0% for those operating outside Hong Kong. If you’re operating within its jurisdiction, though, you’re liable to pay 16.5% of the company’s profits in taxes.
Residency is also not a requirement for registering a corporation. However, companies will have to get a secretary and register an office address in the country.
One of its biggest advantages, though, is its location. Being in close proximity to China means you can access the mainland with more ease. It also provides exclusive China market access through the Closer Economic Partnership Arrangement and it provides better logistics for the Asian market.
Businesses have a high degree of freedom in conducting businesses as well. Corporations will be able to do business activities anywhere in the world.
Panama, known to the world through the Panama Papers leak, is still a viable country for an offshore company incorporation despite the scandal. Contrary to popular belief, it isn’t only for hiding illegal assets as what the media has painted it.
What makes it appealing to companies is that it provides excellent asset protection. Businesses can protect their assets against seizures and lawsuits. It’s also free from the regulations in their home country.
Plus, it has fewer government regulations. Companies don’t need notice or approval from the government to distribute dividends, issue their shares, and more.
It has a corporation tax of 0% for revenue not coming from within the country. There are other tax processes here that will benefit companies. These are better discussed with a formation agent.
Panama corporations also have flexibility; they can do the same activities as in the US, EU, and Canada. They can purchase and own real estate and other types of assets, like cars, yachts, jewelry, and such.
Its tax system and investor confidentiality are the biggest advantages of Bahamas. The country provides tax exemption for 20 years for offshore companies and shareholders. Companies only have to pay a set annual fee regardless of their profit gains and margins.
It also has an International Business Companies (IBC) Act of 1990. This act prohibits information sharing to other countries. In turn, it protects the privacy of offshore corporations in Belize.
Company accounts or figures remain anonymous. Companies in this country don’t have to publish their accounts and balance sheets.
Other than that, Bahamas only requires one shareholder and one director for corporations. It takes only a few days to set up a corporation, and you won’t have to worry about permits, licenses, and such.
It also offers a flexible business structure, allowing you to use it for asset protection, estate planning, and so on. You have restricted activities, though, but these are quite reasonable. The Bahamas doesn’t permit bank, gambling, insurance, and adult activities.
4. Cayman Islands
The Cayman Islands is one of the most popular destinations of offshore hedge funds and offshore companies. The main reason is the 0% corporate tax rate. There are no capital gains, profit taxes, income taxes, withholding taxes, and such.
Apart from that, its registration and renewal fees are lower than in other countries. The country is white-listed by the International Financial Action Task Force and by the OECD, too. It follows international tax regulations, unlike other tax havens.
The Cayman Islands offers privacy to its companies, as well, as the public can’t view the Register of Shareholders or the Register of Directors and Officers. All other business documents are private, including the company accounts and meeting minutes. You don’t have to register these documents to the government.
The government is pretty stable, too, which is a must for offshore corporations. It has a strong economy thanks in part to offshore corporations and its banking system. Speaking of banking, offshore corporate accounts don’t also have to deposit authorized capital in a bank or in an escrow.
Cyprus’ position in the EU makes it an ideal country to put an offshore company in if you’re planning to enter Europe. It’s has been a member since 2004, and it’s a member of Eurozone as well starting in 2008.
When you build a business here, you’ll get an Intra-Community VAT number. This is a legal requirement for companies to do business with other EU countries.
You’re not restricted too much, too, as you have flexibility in the company structure. There’s also no minimum capital requirements, unlike other countries in the EU.
It has one of the lowest tax rates, as well, although it’s not as popular as other tax haven countries in the Carribean. To be specific, Cyprus has a tax rate of 12.5%, one of the lowest in the EU.
Another advantage of this country for investors is that Cyprus isn’t a part of the Automatic Exchange of Information (AEoI). What this means is that when you open a bank account here, you don’t have to share your bank account information.
Deciding Where to Register an Offshore Company
Aside from the location, setting up an offshore company comes with several considerations. There are important documents and records you need to have, and you should also have a good knowledge of your accounts. If you need help with data processing in the US, contact us today and let’s see how we can help.