There are numerous advantages to incorporating your business in a tax friendly jurisdiction. The question often asked is “which one”? To help you decide, we put the most popular jurisdictions into three groups.
Clients wishing to trade internationally and looking for a ‘respectable’ jurisdiction with relatively low tax rates, we recommend Hong Kong, Singapore or the U.K. which can be used throughout the world.
- Maximum tax rate on Hong Kong profits 16.5%.
- Zero tax on Non-Hong Kong profit.
- Best for international trading outside Hong Kong.
- Zero tax where trade is wholly outside Cyprus.
- For international trading outside the E.U.
- No VAT registration.
- Maximum tax rate on Singapore profits 17%.
- Tax rate for small companies, Zero in the first 3 years, thereafter 8.5%.
- Respectable jurisdiction with availability of Singapore bank account.
- Best for international trading outside Malaysia.
- No VAT registration.
- Maximum tax rate on profits 19%.
- VAT registration threshold £85,000.
- Known worldwide & respectable, can be used in an agency structure.
- No US taxes for non US owners where the LLC does not trade in the USA.
- No public disclosure of members and managers.
It is becoming progressively more difficult to use Classic IBCs for ‘open trading’ e.g. selling goods online, obtaining merchant accounts etc. We recommend using IBCs (International Business Companies) and LLCs (Limited Liability Company) for asset holding, including intellectual property or offshore consultancy services.
- Zero taxation.
- Strong privacy.
- No accounts filing.
- Inexpensive to form and maintain.
- No public record.
- No accounts filing.
- RAK is has no corporate or personal taxes.
- Zero taxation.
- Strong privacy.
- No accounts filing.
- Inexpensive to form and maintain.
Almost anything, but with reservations. We would not recommend high profile trading with an IBC directly into the EU, USA, Australasia, and other high tax areas - however RAK can be an exceptions to this as it generally not considered to be a tax haven.
The reasons are: 1. Such trading would attract unwelcome attention from the local Revenue Authorities. 2. In several countries, particularly the core EU, (France, Germany, Spain, Italy etc.) this would provoke withholding taxes e.g. your customer, if a medium or large company, might be forced to pay part of your invoice directly to the local tax office (on the specious grounds that somehow the local revenue is being deprived).
We therefore recommend IBCs to be used for e-commerce, discreet trading e.g. consultancy fees etc., for asset holding, and the holding of Intellectual property (I.P.). IBCs can also be used to own the shares in low tax companies e.g. a Cyprus company may be formed with an IBC acting as shareholder. In such a case the dividends earned by the Cyprus company would be paid to the IBC’s bank account rather then to the beneficial owner.
Clients intending to trade within the EEA should consider a company registered in Europe. VAT registration is often a requirement e.g. for digital downloads, and is possible in any of the following jurisdictions: Cyprus, Ireland and UK.
- Zero tax where trade is wholly outside Cyprus.
- For international trading outside the E.U.
- No VAT registration.
- Relatively easy to register for VAT.
- VAT rate 23%
- Corporate tax 12.5%
- No audit required for small companies.
