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Where to incorporate ?

Where to incorporate ?

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1. Low or Zero Tax Companies Incorporated in 'Offshore' Jurisdictions

Very low or zero tax offshore companies refer to, for example, the differing types of offshore companies that can be formed in offshore company formation centres such as the BVI, Belize & Seychelles.

An IBC (International Business Company) is the most popular type of offshore corporation for asset protection and privacy purposes. An IBC is usually a tax-exempt corporation that can do business all over the world except in the country where it has been incorporated. Popular IBC jurisdictions include BVI, Seychelles, Belize & Ras Al Kaimah in the UAE.

A low or zero tax company can also refer to companies incorporated in jurisdictions which offer both offshore companies and onshore companies and which may benefit from favourable tax regulation and / or special offshore company regimes. For example Mauritius has two types of companies that are used for offshore business and international tax planning.

A further example is Hong Kong. Although not typically regarded as a tax haven, Hong Kong has a favourable tax regime which effectively means that correctly structured, managed and administered Hong Kong companies can be utilised for undertaking offshore business and international business without paying tax in Hong Kong provided that any profits arising are not made in Hong Kong. This type of tax regulation is known as "territorial taxation".

2. LLC or Limited Liability Companies

The LLC or Limited Liability Company and the LLP or Limited Liability Partnership type of company, are a particular class of company used for offshore business, international business and tax planning because they have the advantage of limited liability but the flow-through characteristics of a partnership for tax purposes.

By this, we mean that profits are divided amongst the members, in proportion to their respective holdings, and are taxed in their hands. In some circumstances, if all the members or partners are non-tax resident in the domicile of the LLC or LLP company and no business is undertaken in that country, neither the LLC or LLP company nor the members or partners will be subject to tax in the company's country of establishment.

3. Companies Incorporated in Tax Advantageous 'Onshore' Jurisdictions

Apart from the traditional offshore centres, many 'onshore' jurisdictions have corporate structures that are attractive to international users.

High tax countries compete fiercely to attract international companies and individuals with all manner of tax planning regulations and opportunities. In fact, almost all countries offer tax regulations of one kind or another to encourage inward investment.

These tax advantageous regulations are used for a wide variety of tax planning business, such as:

• Double tax treaty planning relating to dividends, interest and royalty payment
• The establishment of holding, international headquarter treasury and finance operations
• Specialist business, for example, leasing
• Personal and family wealth management and tax planning

International tax advisers have long been aware of the opportunities which exist for improving overall tax efficiency by using the special low tax regimes offered by high tax countries seeking to encourage international business. However, successful implementation of such structures is dependent on a wide variety of issues, often relating to matters such as anti-avoidance provisions, double tax avoidance, controlled foreign company and management and control tests and provisions, transfer pricing, thin capitalisation, participation exemptions, capital gains tax and a myriad of other ever-changing tax regulation.

More recently, the weapons contained in the armoury of the tax collectors have been supplemented by exchange of information treaties and provisions.

So today the offshore world includes the expert implementation of specific tax advantageous structures domiciled in high tax onshore countries. The UK LLP, US LLC, UK Limited Companies, Hong Kong Limited Companies and EU Companies are all examples of domestic structures of particular value for international tax planning purposes.

4. EU Holding Companies for International Investment

Many European Union member states offer Holding Company regimes that are generally favourable with regards to the treatment of foreign sourced income and most have extensive double taxation treaty agreements.

5. Personal Service Company (PSC)

The PSC vehicle, when structured properly with legitimate intent, can not only reduce the overall cost of administration and management of a company, but also provide a tax structure which will minimise the taxpayer's bill.

Many individuals engaged in the provision of professional services in the construction, engineering, aviation, finance, computer, film and entertainment industries can achieve considerable tax saving benefits through the establishment of a PSC. The PSC can contract to supply the services of the individual outside the country in which he is normally resident and the fees earned can accumulate offshore, free from taxation in the offshore centre.

The PSC would be used mainly by expatriates, persons providing international services and consultancy, and professionals looking for asset protection against potential liabilities.

The advantages of using a PSC include:

  • Reducing personal risk

The PSC is set up as a limited liability company. Therefore, it provides protection for professionals offering consultancy services who will usually adopt a professional indemnity cover in order to reduce risks associated with his business. By using a PSC, such risk is reduced even further.

  • Continuity in provision of services

Providing services through a company structure will prove to be a good organisational and marketing tool for two or more persons seeking to provide consultancy services to clients.

  • Reduction of associated costs

Using a PSC reduces the legal, accounting and administrative costs which can arise upon setting up such a company onshore.

  • Reduction of the taxable estate

Using a PSC in one of the recommended jurisdictions will ease the taxpayer's liability as the rate of tax will be much lower than in his country of residence, if not nil. The structure will be set up to ensure that there is little tax which is payable upon repatriation of profits to the beneficial owner and that there is no double taxation of the income.

  • Confidentiality

The jurisdictions recommended for the PSC provide full confidentiality for the applicant.

The ideal vehicle for such a structure would be a company which is exempt from taxation and which has minimal reporting requirements. We would propose a Seychelles International Business Company for this purpose.

The Seychelles IBC is not taxed and monies (profits) can be repatriated by way of dividends back to the beneficial owner's (or owners') country of residence. The net effect is that there is taxation in only one state that is the domicile of residence of the beneficial owners/shareholders. Some countries may exempt the income after being non-resident for a number of years.

To proceed with the set up of such a structure, the principals would need to undergo an initial due diligence check, which involves an identification document, a proof of residential address, a reference from their personal banker and a curriculum vitae, indicating their work experience and areas of expertise.

Along with these documents, a small business plan will also be needed to support the business case of the company. It is recommended that principals have an agreement with the proposed company, to act on its behalf, as a consultant or manager, and thereafter providing services to the company's clients.

All transactions would need to be supported by the necessary documentation to explain exactly what the transactions consist of. Such documents would include contracts with clients, invoices and purchase orders. It is important to note that directors need to maintain enough accounting information to validate the financial status of the company.

Once the above documentation is provided, we can help set up such a company within a few working days.

Confidentiality & Privacy

Pursuant to international regulations concerning the prevention of drug trafficking and money laundering we strictly implements Anti Money Laundering Procedures which comply with the laws, rules and guidelines issued by the jurisdictions with which we operate.Whilst we respect and honour your privacy and respect any need you may have for confidentiality, we are committed to undertaking a full and thorough due diligence ofboth our clients' identities and the nature of their businesses. To this end, we need to be fully appraised of both the rationale behind the establishment of any corporate or trust structure and its modus operandi. This formal approach to due diligence benefits both us and our clients.

We will not divulge to any third party any information concerning its clients, without their prior written consent. We reserve the right to treat this obligation of confidentiality as not applicable when it is obliged by law to divulge such information or when we have been unable to obtain instructions from clients and it appears to us to be in the best interests of our clients to provide information.

To assist clients to keep their affairs private and to prevent unwarranted intrusion we provide the following core services:

• Professional Directors
• Nominee Shareholders
• Bank account signatories
• Administrative assistance
• Communication services, such as telephone and facsimile handling.