An offshore company is one that is set up in a jurisdiction other than the main place of operations of the business or the home country of the business owner. Through this guide, you will understand the reasons you should setup offshore company and how you can do the same.
Benefits of opening an offshore company:
1. Privacy and Security:
Having an offshore company indicates that the business will have higher levels of privacy and security, depending on the government policies of your chosen jurisdiction. In some jurisdictions, businesses do not need to share information about the directors and shareholders of the business; however, in others, they do.
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Tax Benefits:
The taxes levied on businesses differ from country to country depending on the government policies. Various countries charge 0 % tax from businesses and are considered to be ‘tax havens’. Other countries may provide various tax exemptions, reliefs, and incentives in order to promote foreign direct investment.
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Government Policies:
Different countries also have different government policies. In some countries, the government does not require businesses to meet fewer requirements during the incorporation process and in terms of conducting the business.
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Expansion of business:
Businesses may wish to incorporate offshore companies as a way to expand their business globally. This is because setting up an offshore company is usually simplified and less time-consuming owing to fewer legal formalities.
How to register an offshore company?
Step 1: Choosing a suitable jurisdiction:
- The first step for your business would be to decide on a suitable jurisdiction for your business.
- There are multiple factors you must keep in mind including the location, tax policies, financial reporting requirements, banking facilities, and more.
- For a business, choosing a jurisdiction where businesses are subjected to a relatively low tax rate is beneficial. However, various 0% taxation jurisdictions, called ‘tax havens’ are not advisable to set up business in because they may be on the ‘blacklist’ or ‘greylist’ of the Organisation for Economic Cooperation and Development (OECD) or the European Union which leads to an increase in scrutiny by the different authorities and stakeholders of the business. Some of the ‘tax haven’ countries including the British Virgin Islands, Cayman Islands, and Mauritius.
Step 2: Planning and Strategy:
- Once you have identified the jurisdiction you wish to set up business in, you must research on the selected jurisdiction to understand how you can proceed with the registration process. Once you understand the steps you need to undertake, the incorporation process will be smooth and hassle-free.
- Following this you must select a suitable legal entity for your business. Usually, offshore businesses are of the following types:
- Sole Proprietorship
- Partnerships
- Limited Liability Company
- Foreign Offices (Representative Offices or Branch Offices)
- The selection of a suitable legal entity will be dependent on your business activities, needs, and long-term business goals.
- Each of these entities have different pre- and post- registration requirements that you will be required to meet. These requirements also depend on your choice of offshore jurisdictions.
- Some of the common requirements across all the jurisdictions are the following:
- Checking for the availability of the preferred business name and reserving the same with the Registrar of Companies
- Employing a local resident director to represent the company in the offshore jurisdiction and assisting in the registration of the business (You can make use of a Nominee Director if you do not wish to transfer ownership and control of the business)
- Obtaining a local registered office address (Can be a virtual or physical office, depending on the requirements of the government)
Step 3: Register the business with the relevant authorities:
- After ensuring that you meet all the requirements set by the government, you must prepare required documents including the following:
- Business Plan
- Article of Incorporation
- Memorandum of Association
- Proof of office address
- Personal information of the directors and shareholders
- Others
- You will then be required to submit the above documents along with the application form to the relevant authorities in order to register your business.
- Once the business registration is completed, the government will provide you with the Certificate of Incorporation, Memorandum and Article of Association, and more. The resident director can collect it on your behalf and courier it to you if needed.
- Depending on your chosen jurisdiction for your offshore company, you may or may not be required to travel to the selected jurisdiction. Usually, you do not need to travel to the different jurisdiction.
Step 4: Open a corporate bank account:
- Opening a bank account with a bank that provides various services including online banking, multi-currency banking, and more is imperative for an offshore business to carry out global trade and facilitate transactions easily.
- Tetra Consultants can leverage our extensive network of banking partners to ensure that you have a corporate bank account in a suitable bank in your chosen jurisdiction.
Step 5: Remaining compliant with government policies:
- Even after the registration process is completed, you will need to ensure that your business is in compliance with the policies of the government of your chosen jurisdiction.
- Some of these compliance requirements that your business may be required to meet including obtaining a relevant business license, insurance, filing for annual tax returns, submitting audited financial statements, and more in a timely manner.
The total time taken to complete the registration process differs from country to country. It also depends on your choice of business entity. The same is true for the government fees you must pay during the incorporation process.
Contact us now for more information about offshore companies in different jurisdictions and our comprehensive service package that includes everything you will need to setup offshore company. Our dedicated and experienced team will revert within the next 24 hours.
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