An offshore company is set up in a jurisdiction that has a preferential regime for these special types of structures. Countries that are well known as tax havens offer low or zero taxes on company profit, light banking and company formation procedures and the ease of performing and managing international operations. Presented here are the top ten countries for opening offshore companies.
The Bahamas offer tax advantages as well as investor confidentiality. An offshore company incorporated here, the Bahamas IBC, is a flexible business structure that can be used for a variety of purposes, including asset protection, estate planning or tax reduction. The company is exempt from all local taxes and can be incorporated by a minimum of one director and one shareholder. There are a number of restrictions in terms of trading or owning real estate in the Bahamas for the IBC.
A popular offshore destination, Belize is a tax haven where no corporate income tax applies and companies are also exempt from the stamp duty, capital gains tax and the withholding taxes on dividends. Foreign entrepreneurs are welcomed here and benefit from a number of advantages, however, they cannot hold property in Belize or perform trading activities in Belize – they must engage in international trading. The Belize IBC (International Business Company) is easy to set up and there is no requirement for a minimum paid up capital.
- British Virgin Islands
The British Virgin Islands, or BVI, are a reputable international offshore destination that is also tax-neutral for locally incorporated companies. The BVI Business Company is the business form of choice and can be incorporated by one director and one shareholder as well as corporate directors and corporate shareholders. There are no requirements to disclose the identities of the company’s beneficial owners and bearer shares are permitted. The same restriction on owning real estate or trading within the Islands applies to the BC.
- Cayman Islands
Another ideal destination to base an offshore hedge fund or an offshore company, the Cayman Islands are neutral from a taxation point of view and offer a wide array of banking options for investors due to the large number of private banks that have set up their branches here. There is no corporate income tax, no withholding taxes, and no capital gains. Investors can open an ordinary company or an exempt company. Companies are required to file a minimum annual return.
Cyprus has a growing economy that has recovered, making the country an increasingly more attractive destination to base an offshore company in Europe. Its geographical position is one of the country’s most notable advantages: it allows investors to access the European, African and Asian markets. Although it is not a tax haven per se, as other jurisdictions on this list, Cyprus observes the EU rules and regulations but also has one of the lowest corporate income tax rates in the European Union. Investors can seek professional advice on how to open an offshore company in Cyprus.
- Dominican Republic
A jurisdiction that has no exchange controls and no local taxes for companies, including no stamp duty. There is no need to disclose the identities of the company directors and shareholders, thus allowing for a maximum level of anonymity. There are no requirements to hold annual general meetings and the reporting requirements are minimal. The International Business Company is the one used for offshore purposes like international trade, investment and tax planning.
- Hong Kong
Hong Kong is one of the top financial centers in the world and an attractive jurisdiction that offers a stable and efficient banking system and an international business environment that welcomes foreign investors. The Special Administrative Region is not a tax haven as this term is generally understood but it does have a low corporate income tax rate and has signed a number of double tax treaties. Company formation in Hong Kong is a simple process and there is no mandatory requirement for a minimum share capital for the limited liability company.
Panama was already an established tax haven before the Panama Papers and continues to be a jurisdiction that offers an attractive business regime. The currency is the U.S. dollar, an advantage for investors from the United States. Investors here enjoy a high level of banking security and confidentiality and there are low requirements for company management as well as zero corporate income taxes. Company formation in Panama is a simple process.
The International Business Company is the type of company incorporated for offshore purposes and it offers convenient levels of privacy for investors as well as low management and reporting requirements. There is no corporate income tax, no capital gains, gift tax or value-added-tax. Investors are not required to disclose their identities and there is no need to subscribe a minimum capital upon incorporation. The entire company formation process can last between one and two days, depending on the status of the documents.
Competing with Hong Kong as the number one financial center in Asia, Singapore is a city-state that offers very convenient conditions for doing business and this is why it is a destination of choice for many international investors. A low corporate income tax rate, as well as the simplified business policies, are among the top reasons to choose Singapore for offshore company formation. Company owners in Singapore will need to comply with the requirements for accounting and annual reporting.
While it is true that these jurisdictions offer primarily tax advantages, they each have their own particularities and offer different investment opportunities. This list is not exhaustive and investors should know that the information presented herein is not a substitute for professional counseling for offshore company formation purposes. Entrepreneurs are advised to seek assistance from local professionals when incorporating a company in one of these jurisdictions or in other locations.