COMPANIES, BANK ACCOUNTS, TAX RESIDENCE ETC.
In our opinion, Hong Kong is one of the most favorable jurisdictions for company incorporation. Hong Kong has low corporate tax rates, and in many cases profits can be completely tax-free, yet it enjoys a good reputation and is not commonly regarded as a tax haven. Hong Kong is more regulated than a “pure” offshore tax haven, it levies taxes and requires companies to prepare audited accounts. Even though by some this could be considered a burden when compared to other less regulated offshore tax havens, it also makes Hong Kong better regarded and makes it considerably easier to open a corporate bank account. We normally take care of the accounting and audit unless instructed otherwise by the client. Basically, a Hong Kong company can open a bank account anywhere in the world, whereas pure offshore companies from jurisdictions without audit requirement will find themselves restricted to a few banks.Besides Hong Kong, Singapore can be an equally good alternative. Both Hong Kong and Singapore are also favorable in terms of personal tax residence. However, in order for the shareholders to successfully apply for resident visas, they require a solid business plan, relevant experience, proof of sufficient capital and investment in a local office with local staff. We can assist you with the company registration and visa application process no matter if it is in regards to Hongkong or Singapore. However, if you are looking for something more straightforward, a turnkey solution, look no further than Dubai – UAE.
Dubai - UAE is an excellent jurisdiction if you are looking for a quick, easy, straightforward way to gain a resident visa in a tax-free jurisdiction. The basic setup of a free zone company normally entitles the company to apply for 2-3 visas for their employees, depending which free zone you choose. If you rent a bigger office from the free zone, it normally entitles you to more visas.
Below we list a few ways of how to use an international low tax company.
International Trading Company
International trading is the purchase of goods in low-cost production countries e.g. China, India, Thailand etc. and selling them to distributors in high income market areas e.g. USA, Europe, Australia etc., where the actual trading operation may take place from a third country. The goods bought by the trading company are sent directly from the country of origin to the country where they are to be sold. If goods are being bought and shipped from Asia for example, it would make sense to have the company set up in Hong Kong. But it could be anywhere.
Significantly improved profits can be achieved by forming a company which will be used as a trading medium for buying, shipping, and selling the goods.
Most of the profits will be retained by the new trading company that would otherwise be lost in taxation to authorities at the original home location of the trading operation.
Professional Service Companies
Many private individuals engaged in providing consultation in finance, oil/offshore, construction, engineering, aviation, computer, advertising, film and entertainment could make substantial tax savings by setting up an offshore structure. The individuals can be employed by their own low tax company, and the profits generated will flow into this entity.
Through proper tax planning, it’s possible to minimize personal income tax.
Investment Holding Company
Both high net worth individuals and large corporations often use offshore companies to hold assets in a tax and privacy friendly way. It may be cash, earning tax-free interest, stocks or mutual funds, earning tax-free dividends and avoiding capital gains tax and/or it may be properties, avoiding capital gains tax .
As we said before one of the main reason is that the owner wants to keep his/hers privacy. Another reason may be that they want to avoid inheritance tax.
For this purpose, any of the jurisdictions above could be used. But for EU-Holding, we would recommend Cyprus.
As mentioned above, we especially like Hong Kong, Singapore and UAE for offshore company incorporation. These jurisdictions are great for E-commerce, consulting, trading, holding and investing ventures. If you need a Holding solution for European subsidiary companies, it is normally more favorable to set up the holding company within the European Union, e.g. Cyprus. EU countries normally have withholding tax for dividends paid to countries outside EU. However thanks to Cyprus being a member country of EU, no withholding tax is levied on dividends paid to Cyprus resident companies. Also, since Cyprus is an EU member, Cyprus resident companies are normally not subject to CFC regulations for EU residents. These are two of the reasons that make Cyprus companies interesting vehicles for international tax planning.
The two reasons mentioned are also valid for Maltese companies. But in our opinion, a Cyprus company is the ultimate holding entity, while a Maltese company might be interesting for trading operations thanks to the low effective corporate tax rate of ap. 5% in comparison with 12.5% in Cyprus. It is worth considering that the 12.5% corporate tax rate in Cyprus might in reality be much lower thanks to favorable regulation in regards to deductions etc. If one would choose to set up a trading company in Malta, and one is subject to CFC regulations, the best way to take advantage of the dividend payment is through a Cyprus holding company.