In order to find the best country to set up an offshore company, you must invest a lot of time in conducting thorough research. This is because of the large number of jurisdictions available to choose from. Through this article, we highlight some jurisdictions that you can consider incorporating your business in, while highlighting the features of each jurisdiction.
- Hong Kong:
Located in the heart of Asia, Hong Kong acts as a gateway to both the Chinese market and the Asian market. Along with this, the country also has established a strong transportation system with multiple seaports, airports, roadways, and more, connecting it to the rest of the world. This is advantageous to businesses as it allows for a better and efficient trade.
Despite the unstable political environment in the region, the economic and judicial system remains stable and hence, does not serve as a huge problem for businesses. In fact, Hong Kong believes in the complete transparency of the legal system in the region which allows for a better handling of any conflicts or disputes.
Besides this, the government provides foreign investors and business owners with various benefits and incentives in order to attract foreign direct investment (FDI) and thus, stimulate the economy. With a relatively low corporate tax rate of 16.5%, the government provides businesses with exemption from paying tax on foreign income, capital gains, dividends, or more. Moreover, the government has developed an extensive network of tax treaties with over 45 countries which prevents businesses from being subjected to tax twice.
The government has also issued various policies that are advantageous to the corporate sector including intellectual property protection policies, privacy laws, and more.
Additionally, it is relatively easy to set up your business in Hong Kong without any bureaucracy or red tape and fewer compliance requirements set by the government.
Singapore acts as a gateway to the South Asian market which businesses can take advantage of. Besides this, it is well-connected to the world through its established transportation network built off roads, seaports, airports, and more. This allows businesses to reach a wider target audience.
As per the Political and Economic Risk Consultancy, Singapore is the most stable country politically. Besides, it has a sound economic and judicial system with complete transparency and low levels of corruption. This allows businesses to face a lower level of risk as opposed to those in other countries.
Additionally, the government provides businesses with various benefits and incentives to attract foreign investment to the country. The Singapore government levies a relatively low corporate income tax rate of 17% which may be advantageous for the business. Along with this, the government provides various tax exemptions to the small and medium businesses and newly established firms. Besides the above, the Singapore government has issued various intellectual property protection laws that are advantageous for the businesses.
Singapore is also one of the leading financial centres in the Asian Pacific region. There are multiple choices of banks available for businesses that provide different types of facilities that you must evaluate before selecting.
Moreover, due to the clarity in the policies and requirements set by the government, it is relatively easy process to start the incorporation process in Singapore.
Located in the United Arab Emirates *UAE), Dubai acts as a gateway between the East and the West. The country is also connected to the world through its established transportation systems including roads, airports, seaports, and more.
With relatively low public sector corruption which can be seen through the Corruption Perception Index of 2020, the country remains politically stable. Besides, the region is also relatively free in terms of its economy which is beneficial to businesses.
In Dubai, the government does not levy any corporate tax on businesses in industries other than the oil and banking sector. However, businesses are subjected to a value added tax (VAT) rate of 5%. Despite this low level of tax levied on businesses, the country is still not considered to be a ‘tax haven’ and currently remains on the white list of the Organisation of Economic Co-operation and Development (OECD). This can be possible due to the strict monitoring and inspection policies of the government.
Additionally, businesses set up in the Free Trade Zones in the United Arab Emirates can take advantage of the business-friendly policies the government has issued including complete exemptions from import and export duties, high-quality infrastructure, and more.
The incorporation process of business in Dubai is relatively easy and straightforward owing to fewer compliance requirements needed to be met. In fact, UAE received a ranking of 16th out of 189 countries in terms of the ease of starting a business, as per the Doing Business Report of 2020 published by the World Bank.
- British Virgin Islands:
Located in North America, the British Virgin Islands has a stable political and economic environment that lowers the risk faced by businesses.
The government of the British Virgin Islands exempts the businesses in this region from paying corporate income tax, withholding tax, capital gains tax, and more. In fact, BVI is 1st pit of 70 countries according to the Corporate Tax Haven Index of 2021. Hence, BVI is on the blacklist of the OECD which may lead to a negative perception of the business in the eyes of its different stakeholders. Therefore, it may not be an excellent idea to set up your business in a tax haven country. However, businesses in this region are still required to make an annual payment in order to maintain the business.
Moreover, there are more privacy laws that businesses can take advantage of. This is because in the British Virgin Islands, the personal information of the directors, shareholders, and unique beneficial owners (UBOs) are not disclosed to the public which guarantees complete privacy.
The business registration process is relatively easy and convenient to complete as there are fewer compliance requirements that need to be met. There is no need for any audit and submission of financial statements to the government authorities.