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Hello are you ? Are you looking for a professional firm who can form an offshore company for you or who can give you some advice for offshore services ? PLEASE SPEND A COUPLE OF MINUTES TO READ THROUGH OUR WEBSITE I AM SURE THAT YOU WILL GET THE BENEFITS MORE YOU NEVER GET FROM OTHER PROFESSIONAL WEBSITES.
Basically, please answer some questions yourself if possible ? Are you doing offshore or local business ? Do you intend to do offshore or local business ? Why you choose offshore ? How you think the benefits the offshore will bring to you ? Can USA, France, China, Italy, be an offshore company ?
Take a simple example in Dubai and France. I live in Dubai. If I form a company in Dubai, is Dubai a local company or an offshore company ? What if the company was formed in France, can France be a local company or an offshore company ? In word, local company is a company in which you register in the area you live in or you do the business in; offshore company is a company in which you register in the area outside you live in or you do the business in.
Therefore, if you lived in Dubai, and you formed a company in Dubai; Dubai is still a local company; say in another way, if you lived in Dubai, you formed a company in France, France is an offshore company.
You may think offshore will get benefits if you choose offshore company. In this case, choosing offshore gets nothing benefits at all because you have to pay heavy tax; if you choose local company, you get 100% tax benefits as Dubai is a tax free country.
Therefore, first, offshore gets benefits depending upon which jurisdictions you choose.
Take another example. I run food restaurant in France, if I formed a company in Dubai, do I get 100% tax benefits as in previous example and enjoy zero tax. I tell you, No AT ALL. You still have to pay heavy tax in France. BECAUSE YOUR BUSINES IS DONE IN FRANCE. You can only enjoy it if your food restaurant is located in Dubai. It is because Dubai gives a tax incentive to the investors to invest in Dubai. What if your food restaurant was located in USA, Italy, BVI, Hong Kong, etc ...... THE ANSWER IS THAT YOU ARE STILL REQUIRED TO PAY TAX FOR YOUR FOOD RESTAURANT BUSINESS, but if you choose Hong Kong, you will pay less.
It is the second issue. Offshore only gets benefits from the business operations in which the component parts of each operation is first outside your living area, and second not in the same area.
Take trading operations as an example. You live in France. You do trading operations. Trading consists of buying and selling. If your buying operations are outside France, chosen in China; and your selling operations are in USA. Then in this situation, you get 100% offshore benefits. First, in France, you are not doing business in France. In words, France cannot charge to you tax as you do business outside France. Second, you are not wholly doing business either in China or USA. So China or USA cannot charge to you for tax because of partly business you do in China or USA. But either the case if you buy in China and sell in China or buy in USA and sell in USA, then you are 100% chargeable to either USA tax or China tax. BECAUSE both selling and buying in one area becomes local business operations, so it is in law chargeable to local tax.
You might come across a case that your friend is a USA citizen but even he do business outside USA, USA tax authority is still asking him to pay tax. Why ?
It is the third issue. It is what the law enacted by each jurisdiction.
In UK tax law, UK charges for global tax; in USA tax law, USA charges for global tax; in New Zealand tax law, New Zealand charges for global tax; in Hong Kong tax law, Hong Kong charges for local tax. In China tax law, China charges for local tax. France charges for local tax; Italy charges for local tax. Say clearly, if you form a USA company, if you use the USA company to do business outside USA, then your offshore operations are still chargeable to USA tax as in tax law USA charges for global tax. If you form a company in Hong Kong and if you do business outside Hong Kong, then you are in law not required to pay tax as your business is done outside Hong Kong. The same for BVI, Belize, etc ....
Why people not choose Germany, France, Italy, China ? But BVI, Belize, Anguilla, ... etc. Because to form a company in Germany, etc ...must cost you million of dollars ..... For example, you must get working visa in France before you can meet a requirement to form a company in France, you must invest "real" money around US$130,000 to US$1,3000,000 in China, ..... etc. China is one of the offshore jurisdictions most people will invest despite of huge capital amount because CHINA IS A LARGE MARKET WITH OVER 14 BILLION OF PEOPLE LIVING IN CHINA.
Therefore, most investors will choose BVI, Anguilla, Belize, Marshall Islands, etc...because of some features I will list later.
To sum up, you have learnt a lot, at least:
1. Each country can be an offshore company;
2. Only offshore business benefits from offshore company;
3. What is the tax system of each jurisdiction, whether they are global tax or local tax system;
4. What are the set up requirements;
5. What are their legal systems, stable, or always changing, or incomplete.
Point 5. is very important. Take Dubai as an example. You will know that Dubai is a tax free country but smart businessmen will not invest in Dubai nor they will use Dubai company as an offshore company to do offshore business. Why ?
BECAUSE DUBAI CANNOT GIVE FULL LEGAL PROTECTION TO INVESTORS in terms of disputes, legal proceedings, legal processing, etc. For example, if the bank in Dubai retains your money for some reasons you might not know or agree with, how can you do ? Sorry ? If you need some proofs from official departments in Dubai, can you get help ? Sorry ?
I think you will know how to choose offshore company now because you have learnt a lot.
So to enjoy offshore benefits, offshore jurisdictions must have the following features:
a) Tax benefits - if the business operations are arranged carefully the profits from the operations may become zero profits tax or a little profits tax;
b) Simplified set up procedure and requirements - some offshore companies can be registered within the same day, other offshore companies may require only one person registered;
c) Public undisclosure - some offshore companies allow public search, other offshore companies cannot get public search;
d) Costs and the fees - some offshore companies cost a little money, only a hundred of dollars, other offshore companies may cost thousand of dollars;
e) Reporting requirements - some offshore companies require periodic financial reports being filed, other offshore companies need not filing anything at all;
f) Limited liabilities - almost all offshore companies are private limited company in nature, the investors who subscribe the shares of the offshore company are limited to contribute up to this amount (of the shares), and no more.
HOWEVER TRY TO READ MORE BELOW YOU MUST MEET IN THE FUTURE FOR OFFSHORE ISSUES MORE THAN 99% PROFESSIONAL FIRMS WILL NOT DISCLOSE:
Mr. Simon is a smart businessman. He runs international trading business. He made a lot of profits. At first, he came to Hong Kong and registered an offshore company using BVI as an offshore company and opened an offshore bank account, a couple of months later, the bank suspended his corporate bank account without a reason, but only sent a letter to him and explained that your money is suspected in our record. The bank required Mr. Simon to prove how the money he got ? Mr. Simon came to Hong Kong and talked with the bank manager and explained that it is the money from my trading business. The bank manager asked for business proof., and said, "Do you have recorded proofs ?". Mr. Simon explained that my business is done overseas, there is not required to keep any business record at all, my overseas agent hasn't asked me to file accounts to BVI Companies Registry ? The bank manager said, "Sorry, I can't help you", you have no proof, we have to suspend your accounts until further noticed. Mr. Simon found a lawyer and suited the bank but at last got nothing.
You feel terrified, right ? There is one day, your offshore company offshore bank account will be suspended and forfeited your money, YOUR ASSETS ..... BECAUSE OF SUSPECT MONEY OR SUSPECT CRIMINAL OR MONEY LAUNDRY ACTIVITIES OR BUSINESS ....... You as an experience man, you must know it. I tell you, I meet several cases a month for this.
There are many jurisdictions they claim suitable for offshore companies, some are listed below:
Anguilla, Belize, Bermuda, British Virgin Islands (BVI), Brunei, Cayman Islands, Cook Islands, Guernsey, Hong Kong, Malaysia(Labuan), Marshall Islands, Mauritius, Nevis, Samoa, Seychelles, Singapore, St.Kitts, St. Lucia, St. Vincent and the Grenadines, Switzerland, Turks & Caicos Islands, Delaware (USA), UK, Vanuatu.
I will not list out their features you are easy to get from other sources. The above is the first issue. Before I tell you how to solve out, I advise you there is another issue you might also be encounter one day.
Below is a true story.
Mr. Joe is a businessman. Five years ago, he formed a company through a local agency. He formed this company so as to sign up contracts with other suppliers and customers. The business has done successfully and has been growing up and now with more than 20 staff. Later on, because of some reasons Mr. Joe didn't know, the local agency rose up the service fees up to US$2,000 per year, only mentioned including "government fees and our service fees." Because of this sharp increase, he negotiated with the agency and asked for price reduction but failed and at later decided to change agency. He thought he can sign up some papers and get changes because he is a director and shareholder. But surprisingly, not such a case. The result is that he has to either pay the increased fees controlled by the local agency or give up the company and form a new company. You may not know that when you form an offshore company, you cannot change local agency or you have to pay a huge amount of compensation before the change.
BECAUSE:
1. THERE IS NO SUCH LAW TO ALLOW DIRECTORS/SHAREHOLDERS TO MAKE THE CHANGE OF LOCAL AGENCY;
2. IT IS A COMMON PRACTICE;
3. THE LAW OR PRACTICE NEED TO PROTECT LOCAL AGENCY.
There is no an issue if you don't change the local agency.
However, if it is the case that EITHER 1. YOU LOST THE CONTACT DETAILS OF LOCAL AGENCY, OR;
2. THE LOCAL ANGENCY CLOSED THE BUSINESS, OR;
3. YOU CANNOT FIND THE LOCAL AGENCY BECAUSE THEIR CONTACTS HAD CHANGED AND YOU HAVE USED THE OFFSHORE COMPANY TO SIGN UP IMPORTANT CONTRACTS, AGREEMENTS, ETC.... AND NOW THE BUSINESS PARTIES NEED YOU TO SHOW TWO DOCUMENTS, FOR EXAMPLE:
A. CERTIFICATE OF INCUMBENCY ..... the local agency signs up to certify the structure of the company such as directors, shareholders, share capital, etc;
B. GOOD STANDING LETTER ......... the local agency signs up to certify that the company is now in existence
CAN YOU FIND ANOTHER AGENCY TO HANDLE FO YOU ?
THE ANSWER IS ABSOLUTE NO OR UNCLEAR The answer is unclear is that you might find an agency and because he wants to do the business with you, he might promise you first and later say "sorry" I cannot help you and recommend you to form a new company.
AS A PROFESSIONAL LIKE US, WHEN YOU READ OUR WEBSITE, I HAVE A RESPONSIBILITY TO TELL YOU THE TRUE; I DON'T THINK YOU WILL GET SO MUCH VALUABLE INFORMATION FROM OTHER PROFESSIONAL WEBSITES, THEY ONLY SHOW GENERAL INFORMATION YOU CAN GET FROM A LOT OF WEBSITES.
So, how you choose ? Here is one.
I recommend Hong Kong as an offshore company.
Why ?
1. Hong Kong economy system is opened and market oriented with a little government intervention. Investors can choose what businesses they do. In fact, from global statistics records, Hong Kong is No. 1 economy freedom;
2. The capital flows of money between Hong Kong and other countries are freedom, and without controls or restrictions. All currencies such as US$, GBP, Japanese yen, etc are remitted freely between Hong Kong and other countries;
3. Offshore business activities are 100% tax free. The Hong Kong tax law has confirmed that only local business is subject to profits tax, overseas business registered in Hong Kong is offshore business and so is not subject to Hong Kong profits tax. For example, if the international businessman engages in international trading in such as way that he buys goods from China and sells to UK or USA. If both buying activities and selling activities are not happened in Hong Kong, then the profits from that trading business are regarded as offshore profits, and are not subject to Hong Kong profits tax;
4. Low tax rate. Even the business is done in Hong Kong, the tax rate is only 16.5% of net profits. The tax rate is absolutely low, with no other tax systems such as VAT, business tax, capital gains tax, etc;
5. Formation requirement is very simple. An overseas person can be appointed as the shareholder and director of a Hong Kong company, he only finds local professional firms to provide appointment of secretary and provide registered office address;
6. No capital investment is required. The shareholder is only required to sign up the M & A to declare that he will contribute capital to the company, and he doesn't require to pay money to the company;
7. Free use of company name. In other countries, some names are not freely used such as Holding, Group, International ...., etc. However, in Hong Kong, the name is freely used, provided that they are not registered in Hong Kong;
8. It is easy to open an offshore bank account with using Hong Kong company, the investor is required to provide his address proofs, passsport copy, Hong Kong company formation documents and a general description of his business. HSBC and Standard Chartered Bank, as in international bankers, can accept the above documents and open an offshore bank account with multi-currencies and internet banking facilities included within a couple of days, or even in some cases the same day. Hong Kong company is also acceptable from other overseas bankers to open offshore bank accounts;
9. Legal system is using common law and equity that applied in UK and other Commonwealth countries;
10. The common form of Hong Kong company is private limited company. It is private in nature and limited in liability for shareholders;
11. Corporate structuring is allowable. An overseas company can be appointed as corporate shareholder and director of Hong Kong company. For example, a BVI company can be appointed as a director and shareholder of Hong Kong company;
12. Trust law is applicable in Hong Kong. If the investor, for his personal reasons, wants his status being hidden, he can do so with a trust arrangement that the trustee holds the shares for him (as a beneficiary) and he holds the trust deed which proves him a real owner of the shares. The trust law is applicable in Hong Kong. Remember trust documents or such laws are not enforceable, ineffective, invalid or void in other countries such as China;
13. The directors/(shareholders) can appoint secretary to handle the secretarial issues for their company/ even the auditors too;
14. Accounting records are required to keep, and annual statutory audits are required to file to Hong Kong Tax Departments.
Please note this final point. It seems a disadvantage. However, it is an advantage.
This point is also the reason why suggest choosing Hong Kong Company as an offshore company. Before understanding more, please read some Hong Kong key rules.
In IRD (Inland Revenue Department of Hong Kong) law, S.51 has clearly required Hong Kong Ccmpany to keep proper records and accounts for all businesses so as to ascertain the true figures of incomes, losses or expenses.
S.14 of IRD law says that the profits are chargeable to Hong Kong profits tax if the business activities are done in Hong Kong. In other words, if the business activities are not done in Hong Kong, the profits are not chargeable to Hong Kong profits tax.
The strong leading cases such as Hang Seng Bank case and HK-TVB have ruled out that offshore profits are tax free. Hong Kong only charges local profits tax, not offshore profits tax.
S.121 of Hong Kong Company law also requires the Hong Kong company to keep proper books of accounts so as to produce annual financial statement.
S.131 of Hong Kong Company law requires an auditor to be appointed annually to audit the financial statements and issue an auditor report.
What is the purpose ?
First, the audited reports are required to lay down before the Annual General Meetings (AGM) for shareholders to discuss and get approval;
Secondly, the most important for the investors, it is required to file to the IRD (Inland Revenue Department of Hong Kong) and reported to the IRD that the Company has done business and has made a lot of profits and now request to claim exemption of profits tax.
Under the general procedure works, the IRD will give notice to you an evidence that the profits are not subject to Hong Kong profits tax. Government has your proven records that your huge money comes from legal business.
In fact, it is the procedure I never find in other countries that:
1) the offshore company keeps accounts and records;
2) Appointment of auditor to do the audit and issue an auditor report;
3) hold AGM and approve an audited account and file to IRD;
4) file relevant documents to IRD and claim offshore profits;
5) the IRD confirms that your company is not required to pay tax.
How Wonderful, isn't it ? You, as anternational investors, do international business, and you only find a good offshore professional to handle all the papwe works for you, and do annual accounting, auditing, and tax filing, and claim offshore profits. It means you pay zero tax, even you made million, or billion of dollars.
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