Jurisdictions and countries offering a low-tax regime to domiciled and/or foreign companies are most commonly referred to as
tax havens. Generally speaking, a tax haven is a jurisdiction in which taxes are either applied at a low rate or not at all. Well-known examples include Panama, Belize, the Seychelles, the Cayman Islands, the Isle of Man and Hong Kong. Very often, such territories are also called
offshores, with companies registered under these jurisdictions described as
An offshore company (also called an international company) is a company established in order to operate and perform business activities outside the jurisdiction in which it was officially incorporated, as well as outside (or
off the shores of) the place of residence of its directors, shareholders and beneficial owners, which may be crucial for tax planning in certain legal systems. Usually, an offshore company is established in order to receive certain legal or tax benefits, to allow for a particular corporate structure or to protect the beneficial owner’s and/or asset holder’s privacy.
It is widely recognised that in the modern, dynamic business environment, with most countries collaborating to create an intergovernmental tax-monitoring system, it is becoming more and more difficult to achieve your corporate and personal goals. Low-tax jurisdictions provide the perfect environment and the right tools to create a unique, functional corporate structure that suits your needs. Confidus Solutions will provide you with the most efficient solution, tailored just for you.
Features and advantages of using a low-tax jurisdiction
Reducing the volume of applied taxes and securing confidentiality aren’t the only advantages of setting up a company in a territory with a more favourable tax regime. Although attractive tax rates and tax planning are major advantages offered by international companies, the chance to greatly reduce business expenses and maintenance costs is also a very attractive benefit.
Below you will find the six main benefits of incorporating an international business company in one these jurisdictions.
Incorporating a company in a low-tax area provides a legal means to reduce the corporate taxes levied, and this is usually the main argument for relocating your business to a tax haven. Non-resident companies can enjoy an attractive tax regime depending on the jurisdiction of incorporation. Bear in mind that international tax regulations can be extremely complex nowadays, and it is essential to consult with an experienced tax specialist. It is vital to ensure that there are no conflicts with corporate tax obligations in the jurisdiction where the business actually operates.
In some jurisdictions, non-resident companies are not obliged to make public any financial documentation or private information relating to directors and shareholders.
Usually, there are no strict requirements or obligations regarding company management, so the directors and executive staff may make decisions remotely, using power of attorney or nominee services.
Many such jurisdictions can be used as valuable tools for corporate asset protection. Typically, these legal entities are used for holding intellectual property rights or real estate investments.
Comparing onshore and offshore jurisdictions, offshores usually offer a faster and more straightforward incorporation procedure.
Lower requirements for minimum share capital
Incorporating an international business company usually requires only a very small amount of share capital, and there may in fact be no capital requirements at all.
Low-tax company registration aid
Confidus Solutions has reliable partnership arrangements with long-standing and experienced international tax advisers and company registration agents worldwide, providing us with the ability to incorporate tax-exempt companies in a number of jurisdictions. To find out more and receive a bespoke recommendation, contact our team today.
Numerous jurisdictions all across the globe offer tax exemptions. Each offers different tools for tax planning and achieving an optimal corporate structure. We can recommend the best jurisdiction for your company depending on your desired goal, as each area has its own unique benefits. Here are the top five jurisdictions we generally recommend to our clients, but we can also offer other jurisdictions if required.
Luxembourg is a small central European country bordering Belgium, France and Germany. It is renowned for its business-friendly environment and corporate tax regulations, which together allow foreign companies to reduce the amount of tax payable by incorporating within its borders. Approximately 33% of the United States Fortune Top 500 businesses have subsidiary companies in Luxembourg, which offers many options for foreign investment. The most well-known legal structure in Luxembourg is the investment fund. Over the last 50 years, around 3500 investment funds were incorporated in Luxembourg.
The Cayman Islands
Currently, the Cayman Islands offer a very attractive tax regime. In the view of Crystal Stranger, president of corporate tax firm 1st Tax, the Cayman Islands now provide 'probably the biggest tax loophole for individuals as well as multinational corporations'. The tax planning advantages offered by Caymans are obviously worth their price, as many famous businesses from around the world have assets in this location.
The Isle of Man
The Isle of Man is a British Crown-dependent, self-governing jurisdiction, lying in the Irish sea between Northern Ireland and England. Certain companies are subject to corporate income tax at the rate of 0%; however, banking businesses and land and property income are subject to a 10% tax rate. The Isle of Man can be the perfect location for establishing a limited liability company within the framework of a larger corporate structure for tax planning purposes. The Isle of Man is not part of the EU, but EU citizens are permitted to travel without a visa and to reside on the island. However, for employment purposes a work permit is required. The Isle of Man’s legislation also provides great benefits for pensions.
Belize is a small country on the eastern coast of Central America, to the south of Mexico, formerly known as British Honduras. This jurisdiction has a lot to offer international investors as well as corporate giants, with its favourable tax regime and banking legislation. Under the provisions of the International Business Company (IBC) Act of 1990, companies registered in Belize are fully exempt from all taxes and stamp duties on income from any source. An international business company (IBC) incorporated under the laws of Belize is a perfect solution to secure your confidentiality, as nominee services are allowed, but no information on directors and shareholders is entered into the public register.
Panama is a country in Central America, well known for its low-tax regime. Panama is a vital transport hub, as it has the Panama Canal, which serves as a connection for numerous trade networks between the Atlantic and Pacific oceans. This jurisdiction is commonly used as a base for opening and operating personal and corporate bank accounts, as local legislation provides an investor-friendly environment. All information regarding bank account beneficiaries is kept confidential. Companies incorporated within the jurisdiction of Panama may be used as a means to achieve your required corporate structure.
Jersey, or the Bailiwick of Jersey, is a United Kingdom Crown-dependent island, not far from the coast of Normandy (France). Ruled by the Crown in right of Jersey, the jurisdiction has become popular among businesses due to its low-tax regime: the standard tax rate in Jersey is 0%. Financial services companies are an exception — they are subject to a corporate income tax at the rate of 10%. For the company formation – currently there are no minimum requirements for share capital, but any company requires a local registered office (we can provide this for you). In general, the incorporation procedure is a more formal affair and does not include as much paperwork as in other jurisdictions.
Mauritius is a small island in the Indian Ocean, not far from Madagascar. It is a world-famous investment hub, especially for those seeking options for business expansion into Asia. A number of famous international companies have subsidiaries on Mauritius, such as JPMorgan Chase, Citigroup and Pepsi, according to data provided by The Wall Street Journal. Mauritius does apply a 15% corporate tax, but tax-resident companies can take advantage of benefits deriving from the application of double tax treaties. Furthermore, capital gains and interest are not subject to taxation in Mauritius, making it a popular destination for investors worldwide.
Bermuda has been a famous low-tax zone for a long time now. Many large corporations utilise Bermuda’s attractive taxation regime, which offers 0% corporate tax. In 2014, over 25% of all Fortune 500 companies were operating subsidiaries in Bermuda. One of the best examples is Google, which transferred international profits to Bermuda via subsidiaries in Ireland and the Netherlands. Such a solution could potentially save Google approximately $2 billion in taxes annually, according to information provided by Bloomberg.
Gibraltar is a British overseas territory and part of the EU, as it is a member of the European Economic Community (EEC). Taxes in Gibraltar are calculated based on income “accruing in or derived from Gibraltar”, i.e. gained from a business, transaction or property situated on the territory of Gibraltar, at a flat rate of 10%. To determine whether or not corporate profits have accrued in or derived from Gibraltar, local tax authorities evaluate the location of the activities that generated the profit. Currently Gibraltar has no tax on capital gains, no wealth tax, sales tax or VAT. Bear in mind that import duty is payable on most items at a flat rate of 12%.
The Seychelles is one of the most sought-after jurisdictions, offering a favourable tax regime to international investors and entrepreneurs. The government has invested a lot of funds in order to turn the islands into the prestigious investment hub we know today. Over last few decades, the Seychelles has seen a dramatic modernisation of its legislation, which has resulted in the development of an up-to-date, but reasonably strict, investment hub. Laws governing the Seychelles’ tax regime and tax application offer excellent tools for asset protection, tax reduction and privacy protection for both individuals and companies.
The Bahamas apply no corporate income tax, no value-added tax and no wealth tax. However, there is an annual fee that must be paid by any international company within its jurisdiction, with the amount payable ranging from US$350 to US$1,000. Moreover, there is no sales tax in the Bahamas, nor is there an estate tax, a capital gains tax or gift or inheritance taxes. The fact that none of these income sources are subject to taxation makes the Bahamas a good option to consider.
Other famous tax haven jurisdictions include St Kitts and Nevis, the British Virgin Islands, Hong Kong, Liechtenstein and Cyprus.
Confidus Solutions will help you evaluate all of the possible options and choose the most efficient, tailored solution to achieve your personal goals. We will help you analyse the possibilities and choose the best possible jurisdiction with the lowest possible tax regime. If you require more information, take a look at our offered solutions or contact us for an offer unique to you.