Offshore company registration
Healy Consultants Group PLC
23 May, 2014
The most prominent advantage of an offshore company is that it allows international businesses to conduct trade in a more tax efficient manner. For instance, an investor can efficiently conduct business throughout Asia by incorporating a Singapore entity. Registering an offshore company offers multiple business advantages to investors worldwide.
Firstly, offshore companies will allow a young business to defer its annual taxes. For example, entrepreneurs with international businesses can re-invest their profits enabling the young companies to defer their taxes to a future period. Secondly, IBC registration can improve cross border sales for the parent company. For example, a tax exempt Irish offshore company is a more effective vehicle to sell goods and services within the EU than its Asian or Middle East parent company. Furthermore, an Irish offshore company will look more attractive to EU customers together with EU VAT registration.
Furthermore, offshore corporate banking enables businesses to receive and settle foreign currencies, eliminating exchange rate risk while minimizing transaction costs. For example, a HSBC Hong Kong multi-currency offshore business bank account enables you to pay Chinese suppliers with Renminbi (RMB).
Another advantage of starting an offshore business is that low tax, or tax exempt, offshore jurisdictions neither require annual accounting and tax returns nor do they publish the register of shareholders and directors. For instance, an entrepreneur bidding for a large oil and gas contract may appreciate the confidentiality provided by offshore companies. Also, when profits are low, entrepreneurs interested in starting an offshore business entity appreciate the absence of annual compliance costs. It is common to incorporate an offshore business to optimize confidentiality, mitigate financial risk and quarantine. Reputable jurisdictions like Hong Kong or Singapore give strong business law support, providing comfort to our clients when signing contracts with international suppliers and customers.
However, setting up an offshore business faces certain challenges. For example, tax haven entities have limited uses because of their growing negative perception. It is no longer popular to operate international business through companies in offshore jurisdictions such as BVI, Isle of Man, or Bermuda. A customer's perception of tax avoidance overwhelms the positive business intentions. As an alternative, entrepreneurs may opt to incorporate in a reputable jurisdiction with similar benefits associated with offshore companies. In addition, international banks view offshore companies as high risk customers. Consequently, it is harder to obtain approval for offshore bank account opening following company registration. Plus, banks demand increased due diligence from offshore accounts and there is extra ongoing monitoring of such transactions.
In conclusion, before deciding to set up an offshore company, be well aware of the advantages and disadvantages of offshore business. Choosing a suitable jurisdiction will not only allow tax-efficient business but also protect your firm's image.
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