One
of the most common uses of IOFCs
is for the collection of revenue from technology
licenses, franchise fees, and royalties
on other transfers of intellectual property.
These types of payment often result from
transfers of intellectual property from
more advanced nations to less advanced ones.
Such payments are often subject to withholding
taxes in the country from which they
originate, and will get taxed, perhaps doubly,
on arrival in the country of the licensor.
Therefore an IOFC having good double-tax
treaties with emerging markets countries,
and not levying withholding tax on onward
payments, will be a suitable location for
an intermediary company. If the offshore
collection company can be independent of
the originating company (the licensor or
franchisor) then so much the better, and
the profits from licensing may be available
free of tax altogether.
The
US and many other countries have legislation
designed to ensure that companies do not
manage to escape tax due on the sale of
intellectual property from offshore jurisdictions.
However, this legislation was not designed
to cope with digital downloads of intellectual
property or property rights from servers
in offshore jurisdictions. Many tax-efficient
opportunities of this type are arising as
the range of digitally downloadable products
expands, but great care is necessary in
setting up such schemes given the uncertainty
of the legal and fiscal environment.
While tax
treaties are not absolutely vital to
the success of offshore licensing schemes,
they are quite important, and the list of
jurisdictions below is restricted to those
IOFCs having good networks of double-tax
treaties. Click on any underlined jurisdiction
for a full description, including details
of that jurisdiction's double tax treaty
network:
Cyprus,
Gibraltar,
Ireland,
Luxembourg,
Madeira,
Malta,
Mauritius,
The
Netherlands Antilles,
Panama
Perhaps because
licensing was one of the earliest significant
uses of what used to be called 'tax havens',
many of the high-tax jurisdictions terminated
tax treaties that they used to have with
some of the more blatant IOFCs. There is
by now a division between those IOFCs that
try to maintain at least the appearance
of a normal fiscal regime, and those that
don't bother.
In the Lowtax.net
jurisdictions section, information is
given about business activities for each
of the following completed jurisdictions:
Andorra,
Anguilla, Aruba,
Bahamas,
Barbados,
Belize,
Bermuda,
British
Virgin Islands,
Cayman Islands,
Cook Islands,
Costa Rica, Dubai,
Cyprus,
Gibraltar,
Grenada, Guernsey,
Hong Kong,
Ireland,
Isle
of Man, Jersey,
Labuan,
Liechtenstein,
Luxembourg,
Madeira,
Malta,
Mauritius,
Monaco,
The
Netherlands Antilles,
Panama, Seychelles,
Switzerland, Turks
& Caicos Islands and Vanuatu.
To
be kept updated as to our progress click
here.
