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International Company Formation

Sponsored by Avia and Slogold Group S.A.
30 January, 2012

In a globalized world, where ever-increasing volumes of trade and investment are being conducted with little regard to national borders and huge sums of money can be transmitted around the earth at the press of a button, the demand for international companies, often located in offshore jurisdictions, has probably never been higher.

International or offshore companies can be used by a variety of people to achieve a number of aims. Expatriates who have become non-resident in their home jurisdictions, or who expect imminent departure for a job or retirement elsewhere, can legitimately use offshore companies to shelter income from high levels of taxation; and offshore trusts remain one of the best ways to minimize cross-generational inheritance taxation, as well as offering asset protection for professionals against liability suits.

While offshore locations continue to offer solutions for the management of private wealth, a major growth sector in recent years has been on the corporate side. There are numberless ways in which offshore locations can offer tax-efficiency to corporates: holding companies for dividend flows; onshore or offshore listing structures; special purpose vehicles; IP management and licensing; international treasury management; real estate ownership and rental.

It’s a remarkable fact that the pressure on ‘offshore’ over the last twenty years from the OECD, the FATF, the EU and the G20 has actually had the unexpected result of making ‘offshore’ respectable. Almost all of the main jurisdictions have fallen in line by reorganizing their local tax regimes, not by increasing international tax rates but by reducing local ones, while they have rushed to sign ‘Tax Information Exchange Agreements’ and classical tax treaties with larger, high-taxing countries. It is true that there has been a loss of confidentiality for tax fraudsters, but in most situations, the main offshore jurisdictions are just as secure and private as they ever were. For many people, and certainly for companies, the existence of double tax avoidance treaties is a positive advantage when dealing with an offshore jurisdiction.

While the events of the last quarter century have undoubtedly brought ‘offshore’ and ‘onshore’ closer together in economic terms, forming a company in a foreign or offshore jurisdiction can still be a complicated business, not least in the company formation process itself. Many offshore jurisdictions have lots things in common as regards their company laws, especially the British Dependent and Offshore territories which have tended to follow the English common law. There are still many local quirks and variations however, and many of the concepts in civil law regimes may be unfamiliar to those who are used to doing business under a common law system. For example, some jurisdictions may permit a company to be formed with just one director, while others will require more than one. There are also differences in the amount of initial share capital needed in order to form a company, or whether bearer shares are permitted.

Company formation procedures are generally a lot simpler and faster than a few years ago thanks to electronic registration systems which have cut down on the amount of paperwork needed. The time taken for a new company to be approved may still vary depending on the jurisdiction, but 24 hours or less is not uncommon these days.

Most jurisdictions charge initial registration and ongoing annual registration fees. While offshore jurisdictions are generally in competition with each other for international business, these fees can still be quite high in some location. Other more general factors must also be considered when choosing the most appropriate jurisdiction in which to form an international company.

One of the most basic, yet also one of the most important things to ponder, is the political and economic stability of the territory in question. Another important consideration is the jurisdiction’s professional infrastructure and telecommunications infrastructure. Even the most remote offshore jurisdictions are now relatively well-connected to the global communications network via telephone or internet, but if communicating with advisers across the other side of the world is going to be problem, it may be wiser to rethink your options. Geographical location is therefore also important, and it is vital that the time zone in which the offshore structure is based is taken into account.

So, as has been illustrated here, forming an international company can be quite a minefield! In all almost all circumstances, the process of forming a company offshore would be handled by a corporate service provider, adviser or local law firm - but it also pays to do one’s homework, and in the next section of this feature we summarize the company formation rules in some of the most popular jurisdictions around the world.



The corporation limited by shares is the most frequently used corporate form in Panama, and is the usual choice for an offshore operation.

Corporations are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5). A corporation is formed by two subscribers (or nominees in the case of absent foreign subscribers) who execute the Articles of Incorporation (Statutes) before a notary and then record them at the Public Registry Office, paying a capital tax (minimum USD60.20 on the usual capital of USD10,000). There is an annual registration fee of USD300.

All commercial and industrial businesses must have a Notice of Operations in order to engage in business unless they are specifically exempt. The cost of a Notice of Operations is 2% of a company's net worth up to a maximum of USD60,000.

Following incorporation, only one shareholder is necessary. Shares can be of various classes, can have par value or not, may be registered or bearer. There is no minimum capital, and no paying-up rules, except that no-par-value and bearer shares must be fully-paid when issued. Strict regulations now apply to bearer shares: the registered agent must keep the bearer share certificate in safe custody and must notify the Registrar about such shares.

There must be at least three directors, and their names must be in the Articles as filed; changes to directors must also be filed. Each corporation must have a resident Panamian agent (a lawyer), named in the Articles; there are no other filing requirements unless the Articles are changed or the corporation is merged or dissolved.

Taxation in Panama, which is governed by the Fiscal Code, is on a territorial basis; this is to say, that taxes apply only to income or gains derived through business carried on in Panama itself. The existence of a sales or administration office in Panama, or the re-invoicing of external transactions at a profit, does not of itself give rise to taxation if the underlying transactions take place outside Panama. Dividends paid out of such earnings are free of taxation.

From 2011, the corporate tax rate fell to 25% from 27.5%. However, companies in the energy, telecoms, financial, insurance, banking and mining industries which will pay tax at 27.5% from 2012 until 2014, whereupon the rate for these companies will fall to 25%. Companies with turnover of less than PAB200,000 per year pay income tax at individual rates.

Costa Rica

The Commercial Code 1964 governs the creation of companies, partnerships, trusts and sole proprietorships. The stock corporation is the most commonly used corporate entity and the sole proprietorship is an interesting concept if only because it is so far removed from the sole proprietorship of a common law jurisdiction.

Even though Costa Rica is a civil law jurisdiction trusts are permitted. The tax laws do not discriminate between onshore and offshore operators and as such the concept of a tax exempt company does not exist.

Article 227 of the Commercial Code makes provision for the migration of a foreign company to Costa Rica and for the re-domiciliation of a Costa Rica company to a foreign country upon the presentation of a shareholders' resolution. Migration does not entail the dissolution of the corporation in its country of origin or the incorporation of a new company in Costa Rica. The law of the foreign corporation must permit its re-domiciliation. Note that all corporate filings must be in Spanish.

The stock corporation (sociedad anonima) is the most popular form of business organization and has the following characteristics:

  • It must have 2 subscribers at the time of incorporation; thereafter a single shareholder is permitted; corporate shareholders are permitted;
  • Shareholder meetings must be held annually and can be held anywhere in the world provided that provision is made for this in the articles;
  • There is no minimum share capital requirement, however at least 25% of the issued capital must be paid up on incorporation;
  • Shares of no par value and bearer shares are not permitted; preference and deference shares are permitted;
  • The stock corporation must have a registered office, a fiscal agent, a resident agent (who is a local lawyer) and a minimum of 3 directors (resident or non-resident) one of whom (the President) has power to manage the company; directors' meetings can take place anywhere if the articles pemit it.

Reporting requirements are minimal. The company must file a tax return irrespective of whether it is liable to pay tax on its income.

Incorporation is relatively quick for a civil law jurisdiction, taking some 4 weeks in all. Since stamp duty is payable on issued share capital the practice is to keep the value of issued share capital low thereby keeping the costs of incorporation to a minimum.

In Costa Rica business tax legislation is currently based on the principle of territoriality meaning that all business income which has a foreign source is tax exempt. Only that proportion of business revenue earned within Costa Rica is subject to an assessment by the tax authorities.

All business entities whatever their form and whether they be sole proprietorships, partnerships, branches, stock corporations or limited liability companies pay income tax on the profits of their trade.

Corporate income tax is charged at progressive rates up to a maximum of 30%.


Belizean laws allow for the following categories of business ownership:

  • Private Companies
  • Limited Liability Partnership
  • Limited Life Companies
  • Joint Ventures and Cooperatives
  • Partnership
  • Sole Proprietor
  • Public Investment Companies
  • International Business Companies
  • Trust Funds

However, almost all offshore or foreign businesses use the International Business Company or Trust forms, sometimes in combination.

An International Business Company (IBC) is formed under the International Business Company Act 1990.

An IBC is formed by filing Articles and Memorandum of Association along with the required fees. The following are the main characteristics of an IBC:

  • There is no minimum paid up capital requirement, and capital may be expressed in foreign currency;
  • An IBC may issue bearer shares and shares of no par value; but bearer shares must be held in the custody of a local registered agent;
  • Subscribers may include an individual, a corporation or a Trust;
  • A company may have nominee shareholders using local licensed registered agents;
  • There is a minimum of one director, who can be an individual or a corporation;
  • A secretary is not required (but can be useful);
  • Each company must maintain a Registered Agent and a Local Registered Office using licensed individuals or companies - these are the only details about an IBC that are available on the public file;
  • There are no requirements for an IBC to file details related to shareholders or directors or for the filing of audits or accounting reports;
  • No meetings are required of directors or members;
  • There are no exchange controls for an IBC;
  • Foreign companies may continue (re-domicile) as Belizean IBCs, and vice versa.

The IBC act prohibits an IBC from:

  • Carrying on business with persons resident in Belize;
  • Owning an interest in real property situated in Belize, except lease property for office purposes;
  • Carrying on banking business;
  • Carrying on insurance or reinsurance business;
  • Carrying on the business of providing registered agents/offices for companies.

Otherwise, a Belize IBC may engage in any activity that is not unlawful in Belize.

Belizean IBCs are specifically exempted from any form of income tax, capital gains or transaction tax. Any IBC can conduct its business in any foreign currency it may choose free of the Belizean government regulation or restriction.

Among the many uses of IBCs are:

  • to establish securities trading accounts in the United States, Canada and Europe, either directly or through Belizean intermediaries;
  • to hold title to real estate in jurisdictions other than Belize;
  • to collect commissions, royalties or dividends or to re-invoice trade transactions.Under the International Business Company Act of 1990, IBC's are exempt from most types of taxation.


On 1 January 2007 the British Virgin Islands Business Companies Act 2004 (the BVI BC Act) became the sole Business Companies Act in the jurisdiction, creating an environment where financial institutions and corporations can undertake a wide range of structured asset and project finance transactions in the BVI.

The Act requires companies to use a registered agent to ensure compliance with the new laws.

Under the 1984 IBC Act, which preceded the 2004 Business Companies Act, just one corporate form was available, that of the company limited by shares. Under the new regime, several different types of companies can be incorporated. These are:

  • Companies limited by shares. Likely to remain the most popular form of BVI company. (For more detailed information, see the British Virgin Islands International Business Company section below);
  • Companies limited by guarantee not authorised to issue shares. This corporate form is likely to prove useful for not for profit organisations;
  • Companies limited by guarantee authorised to issue shares. This 'hybrid' type of company provides greater flexibility in structuring transactions, as a result of its combined equity and guarantee membership;
  • Unlimited companies authorised to issue shares. This structure provides greater transparency, as it is possible to look through the company to its shareholders; and
  • Unlimited companies not authorised to issue shares. This type of company could be used to ensure effective estate planning.

The Act also allows companies to be registered as Restricted Purposes or Segregated Portfolio Companies. The former would likely be used primarily in structured finance transactions, while the latter's use will be limited to mutual funds and insurance companies.

The legislation allows more flexibility on the name that can be used by a BVI business company, and allows the re-use of the name of a company which has been previously struck off from the register, has changed their name, or been dissolved. The Act also permits company names to contain foreign characters, which should be particularly attractive to company owners in the Far East.

The BVIBC Act has abolished the concept of authorised share capital and replaced it with a maximum number of shares that the company is entitled to issue.

It has also removed the requirement that a dividend can only be declared and paid out of 'surplus', leaving in place the pre-existing solvency test requirement, and has boosted the rights of minority shareholders.

As previously stated, a registered agent must apply to form the company and provide a written consent to act, but the registered office of the company need not be the address of the registered agent, although it must be within the BVI.

The Act has also formalised and tightened the record keeping obligations of companies.

Bearer shares are now prohibited unless authorised by the memorandum or articles of association, and bearer share certificates must be deposited with a custodian who has been approved by the BVI Financial Services Commission.

In the British Virgin Islands there is no capital gains or capital transfer tax, no inheritance tax, and no sales tax or VAT. There are stamp duties on certain transactions, and property taxes. Income tax was abolished in 2004.



On July 1, 2008 a new Guernsey Companies Law was introduced in parallel with a new Guernsey Registry. This saw the Island’s system for company formation and administration move from a court-based model to a streamlined statutory process. The Registry is utilising cutting edge online technology to provide users with incorporations in 15 minutes for prices starting from GBP100 whilst maintaining the Island’s hallmarks of personalised service. Online searches and online filing submissions will be the norm.

Directors, who will be issued with electronic signatures, will be notified automatically of all events at the Registry which affect their company. Annual returns have been replaced by an annual validation whereby companies simply validate the information held on them at the Registry once a year.

The 2008 Companies Law consolidated much of the companies legislation enacted in the wake of the Companies (Guernsey) Law, 1994, and many of the former Act's provisions remain in the updated legislation. Protected Cell company legislation was also consolidated into the new Act. Two other additions to the new law are the reduction of regulatory requirements, and the introduction of a comprehensive system of corporate controls and governance.

Advocates are no longer required to act in the incorporation process and corporate service providers (CSPs) are the only people who may make an application for the incorporation of a company. CSPs must obtain a fiduciary licence from the Guernsey Financial Services Commission.

The administrative procedures for amalgamating a company and migrating a company in or out of Guernsey have been streamlined by abolishing the requirement for Royal Court approval. Both procedures will now require the consent of the Guernsey Financial Services Commission, followed by an application to the Registrar.

The powers of an auditor have been enhanced to investigate companies, which include giving auditors rights to obtain information about resolutions and meetings of the company.

The most popular company form in Guernsey is the Company Limited by Shares, formed under the Companies (Guernsey) Law 2008.

Single member companies may be formed under the new law, dispensing with the need for at least two shareholders. There can be one or more directors, but there is no longer a requirement for a company secretary. There are no residence restrictions on directors.

There are 'default' standardised articles for incorporation, unless a company draws up its own constitutional documents.

Annual returns are no longer required, but companies are required to validate information held by the Companies Registry on an annual basis.

Every company shall hold a meeting of its members within 18 months of the date of incorporation and then once every calendar year thereafter. No more than 15 months may elapse between one annual general meeting and the next.

Guernsey companies may be incorporated under the laws of another jurisdiction under the 2008 Companies Act.

The 2008 Companies Act also allows for the formation of mixed liability companies.

Provisions were made in the 2008 Companies Act for both Protected Cell Companies and Incorporated Cell Companies. The benefit of the cellular structure is the ability to segregate and manage risk – a feature which has made the use of these structures popular with the investment and insurance industries. The ICC provides additional inter-cell security in the event of insolvency and unlike the PCC, permits each cell of the ICC to contract with each other.

In July, 2006, Guernsey's parliament passed a set of economic and taxation changes that included the zero rate of corporate tax except for specific banking activities which are taxed at 10%. In Guernsey there is no general capital gains tax, capital transfer tax, purchase or sales tax or VAT.


Irish company law is contained in the Companies Acts 1963 - 2009. A private company is one which by its articles:

  • Restricts the right to transfer its shares
  • Limits the number of its members to 50
  • Prohibits any public subscription to shares or debentures

A company is formed by submitting its Memorandum and Articles of Association to the Registrar of Companies along with the registration fee. There need to be two directors and a secretary, none of whom need be Irish. However it is normal for there to be one Irish director who can act as a local representative.

A company must have an auditor, and accounts must be filed each year with the Companies Registration Office. Small companies can prepare abbreviated accounts which do not have to include the level of turnover.

Since 2000, it has been a requirement that Irish companies need at least one resident director, or must deposit an insurance bond with the Registrar.

Any overseas company may operate in Ireland as a branch, but must register with the Registrar of Companies under Part XI of the Companies Act 1963. Copies of the company's Charter and Bye-Laws (Memorandum and Articles of Association) must be lodged, along with details of the directors and other officers. There needs to be an authorised representative in Ireland. The branch needs to file annual accounts with the Companies Registration Office.

A new Companies Bill is progressing through parliament which will consolidate 13 Companies Acts and numerous statutory instruments that span a 43-year period, into a single piece of legislation.

In Ireland there are no specific forms of company or other entities designed for offshore operation.

Following the introduction of the Finance Act in 1999, a number of special tax regimes have ceased. However, the agreed new regime, which entails a flat 12.5% rate of corporation tax, is far superior to anything available elsewhere in the EU.


Gibraltar was one of the first of the British dependent territories to develop tax-exempt corporate forms for offshore business. It has quite high internal income taxes, but offers low-tax regimes to both companies and individuals, as well as incentives for incoming investment. It is probably the cheapest European offshore jurisdiction in which to operate but is smaller than many of its rivals.

There is a sophisticated business and professional infrastructure. Business sectors with offshore activity include banking, insurance, investment fund management, trust management, shipping, and investment holding companies. In the past decade, there has been an influx of UK betting and gaming operations fleeing high taxes and using the very good telecommunications facilities to offer Internet betting services.

It was Gibraltar that originated the exempt company form, which has been widely copied by other jurisdictions. The low set up cost made them ideal for property and investment holding, international trading and sales agencies, particularly if trade was being carried on between two high tax jurisdictions. The exempt company form was, however, abolished at the end of 2010.

The most popular form of company is now the Private Limited Company which are incorporated under the Gibraltar Companies Ordinance 1930 which is based on the English Companies Act 1929. The basic rules are as follows:

  • A private company limited by shares is required to have at least two members, who can be individuals or companies; one shareholder can be a nominee company holding a share on trust for the other shareholder; the maximum number of members is 50; the Memorandum and Articles of Incorporation state that the company is private, restrict the transfer of shares, and prohibit public offerings of the shares;
  • Annual returns must be made to the Registrar, and details of the shareholders and capital structure are held on the public files;
  • Only one director is required; secretaries are not mandatory, and they may be corporate;
  • There must be a registered office in Gibraltar where the statutory books are kept;
  • There is no requirement for accounts to be filed; tax-resident companies however have to submit accounts to the tax authorities;
  • A Gibraltar company can be incorporated within 7 working days and ready-made companies are available for immediate use.
  • There is a 0.5% duty on authorised share capital (minimum duty GIP10);

If a foreign company intends to establish a branch or a permanent place of business in Gibraltar, it must within one month deposit with the Registrar of Companies a certified copy of its Memorandum and Articles of Association, a list and particulars of its directors and company secretary, and details of one or more resident individuals authorised to receive notices and communications. Once registered, the foreign company will be treated in the same way as a Gibraltarian company, and can take exempt or qualifying status if appropriate. The annual fee for a branch registration at the time of writing is GIP300.

While ‘offshore’ companies have been abolished, a protracted reform of corporation taxation in Gibraltar means that, with effect from January 1, 2011 new rate of 10% applies to all companies except energy and utility providers who pay a 10% surcharge and thus suffer a rate of 20%. These will include electricity, fuel, telephone service and water providers.



Labuan is part of Malaysia, and Malaysian company law applies there. Most foreign companies wanting offshore status in Labuan will use Offshore Company or Limited Partnership status. These offshore forms are subject to Malaysian Company law except as described below. Regular Malaysian companies can be used in Labuan, but will not receive the tax and other privileges accorded to Offshore Companies.
Generally, companies incorporated in Malaysia are regulated by the Malaysian Companies Act, 1965. The types of companies are:

  • a company limited by shares, which can be private or public;
  • branch of a foreign company;
  • partnership or sole proprietorship.

Foreign investors normally conduct their businesses in Malaysia in the form of a private company limited by shares.

Incorporation of a company requires an application to be made to the Registrar of Companies to approve the proposed name by submitting the following forms:

  • Memorandum and Articles of Association
  • Statutory declaration of compliance with the Companies Act
  • Certificate of identity
  • Consent to act as director
  • Statutory declaration by persons before appointments as directors

Companies pay registration fees based on the amount of authorized capital, and both filing and stamping fees apply for submission of the above documents.

A company must have a minimum of two directors and one secretary, having their principal or only place of residence in Malaysia. A register of directors is kept at the registered office of the company and is available for public inspection.

Audited profit and loss accounts and annual returns are required.

Partnerships and sole proprietorships must register with the Registration of Businesses before they can begin to operate. There is a registration fee and an annual renewal fee.

New laws which, it is hoped, will substantially improve Labuan’s competitive edge in international financial markets came into effect in February 2010. The new laws allow for the creation of Labuan foundations, limited liability partnerships, protected cell companies (insurance and mutual funds), shipping operations, Labuan special trusts and financial planning activities. These complement the existing available range of products and services and aim to provide investors with a wider choice of financial products to maximise investment opportunities.

The Labuan Offshore Business Activity Tax Act 1990 (as amended in 2004) provides for the reduction or complete exemption of income tax in respect of certain business activities carried on by offshore companies in Labuan.

Chargeable profits derived by an offshore company from an offshore trading activity are subject to tax at a rate of 3%.

Alternatively, an offshore company which carries on an offshore trading activity may, within three months from the commencement of any calendar year, elect to be charged to tax of M$20,000 for that year of assessment.

An offshore company which carries on an offshore non-trading activity is exempt from income tax altogether.

The Income Tax Act 1967 applies to any activity other than offshore business activity carried on by an offshore company, ie they pay normal taxes.


Until 2001, companies in Mauritius were formed under the Companies Act 1984, which was modelled on the English Companies Act 1948.

The new Companies Act 2001 replaced most of the Companies Act of 1984, other than sections dealing with insolvency and public companies, which remained in force until new legislation was brought forward in separate bills in 2004.

The Government's starting point for the new law was New Zealand company law, which is widely regarded among English-speaking jurists as representing the best available compromise between the various modern trends in corporate legislation, now that English law has been so influenced by EU law as to be no longer satisfactory as a model for common law jurisdictions.

The incorporation and management of Offshore Companies and International Companies, which were previously constituted under the separate International Business Companies Act 1994, have been brought under the Companies Act 2001, and the two types of company are now known as Global Business Company 1 (GBC1) and Global Business Company 2 (GBC2).

In terms of the Financial Services Development Act 2001, a GBC1 is defined as a company engaged in qualified global business and which is carried on from within Mauritius with persons all of whom are resident outside Mauritius and where business is conducted in a currency other than the Mauritian Rupee. A GBC1 may be locally incorporated or may be registered as a branch of a foreign company. The business of an GBC1 Company must be conducted in foreign currency other than for day-to-day transactions; and GBC1 companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property.

A GBC1 Company is treated as resident, and has access to Mauritius' double tax treaties, subject to possession of a Tax Residency Certificate.

They pay a relatively high annual registration fee. Annual accounts must be filed, but the GBC1 company is exempted from the need to file an annual return.

GBC1 companies are suited to public financial operations such as fund management; for holding private assets, a GBC2 (International) Company or an Offshore Trust (see below) is more suitable.

By the end of 2009, 75% of all GBC1 companies were operating in the field of investment holding. Other activities of GBC1 companies included: Collectives Investment Schemes, Financial Business Activities, Trading, Consultancy, Closed-ended Funds, ICT and Intellectual Property.

The Global Business Company Category 2 (GBC2) replaced the old International Company under the Companies Act 2001. The International Company (IC) is the Mauritian equivalent of the International Business Company found in many offshore jurisdictions. It was established by the International Companies Act 1994, but is now constituted under the Companies Act 2001.

An GBC2 can take any of the forms permitted under the Companies Act 2001. Unlike the Offshore Company, the IC used to be able to issue bearer shares, but this is no longer permitted - however, in other respects the share structure can be flexible:

  • There is no minimum capital requirement although at least one share must be issued and paid up;
  • Registered shares and a variety of shares such as preferred, redeemable, and fractional are allowed;
  • Shares may be issued with or without par value;
  • Redeemable preference shares may be issued;
  • Only one shareholder and one director are required.

However, a GBC2 is treated as non-resident, cannot get the benefit of Mauritius' double tax treaties, and cannot operate in the Free Port.

Mauritian citizens are not permitted to own shares in a GBC2. There are a number of other restrictions on GBC2s; they may not:

  • Raise capital by public subscription;
  • Carry on banking or insurance business;
  • Own real property in Mauritius;
  • Own or manage a collective investment fund;
  • Provide nominee services, or provide trustee services to more than three trusts.

GBC2 companies are not required to file annual accounts, and confidentiality may be preserved through the use of nominee directors and shareholders.

The rate of corporate income tax in Mauritius is currently 15% on chargeable income, having been reduced from 25% as of 1st July, 2007.

A GBC1 (old Offshore Company) pays corporate income tax at 15% (0% if it was incorporated before 1st July 1998).

GBC1 Companies are also exempt from stamp duty, land transfer tax, and capital gains (morcellement) tax.

There are no withholding taxes or equivalent deductions on dividends or other payments made by GBC1 companies to non-resident shareholders (residents aren't normally allowed to hold the shares of such companies).

A GBC2 (old International Company), - officially an exempt-status GBC1 Company - has the same tax benefits as a GBC1 Company; however, it is considered as non-resident, and cannot make use of Mauritian Double Tax Treaties.

Hong Kong

Since 1st July 1997 Hong Kong has been a special administrative region (SAR) of the People's Republic of China. The constitution is known as the "Basic Law" and is modeled on the constitution of the People's Republic. Under the guiding principle of "one country, two systems" which was established before the handover the Chinese Government agreed that Hong Kong's capitalist system would remain unchanged until the year 2047.

Hong Kong has thrived historically as a trading entrepot serving many Asia Pacific countries, and also as a low-cost manufacturing centre, although latterly the rise of cheaper Asian competitors has driven the SAR more into the provision of services, particularly financial services.

In Hong Kong businesses normally trade as either limited companies, limited partnerships or sole proprietorships. Being a common law jurisdiction the concept of a trust is readily understood and widely used.

The tight secrecy, minimal corporate disclosure and loose administrative requirements which characterize some island offshore common law jurisdictions and make these territories attractive locations in which to base commercial operations have no counterpart in Hong Kong, whose company and trust law are virtually identical to their United Kingdom equivalents.

To found a business company in Hong Kong, it is necessary to register with the Business Registration Office of the Inland Revenue Department within one month of the commencement of business.

In general the minimum capital requirements for a business corporation are very low or nonexistent and all legal business forms are open for foreign participation.

Corporate entities are governed by the provisions of the Hong Kong Companies Ordinance 1984 which brought the territory's company law into line with United Kingdom company law. Their key features are as follows:

  • The minimum number of subscribers and shareholders is two; if the number of shareholders falls to one, the remaining shareholder is personally responsible for the company debts;
  • There is no minimum authorized or issued share capital requirement;
  • Shares of no par value and bearer shares are not permitted;
  • Shares can be issued at a premium or discount (if sanctioned by the court);
  • A company may purchase its own shares out of distributable profits;
  • Nominee shareholders, directors and secretary are permitted;
  • The minimum number of directors is two; corporate directors are permitted (unless the company is a public company);
  • The articles can provide that the directors' liability for the company be unlimited;
  • Every company must have a secretary which can be an individual or a corporate body, but must be resident in Hong Kong;
  • Meetings can be held anywhere in the world;
  • Accounts must be prepared, filed and audited;
  • The migration and re-domiciliation of corporate entities to or from a foreign jurisdiction is not permitted;
  • Annual returns must be filed.

The Articles of Association of a private company must restrict the right to transfer shares, must limit the number of members to fifty (excluding employees), must prohibits any invitation to the public to subscribe for any shares or debentures of the company.

Every Hong Kong company must register annually under the Business Registration Ordinance.

Since profits tax is levied only on Hong Kong-source income, other types of revenue flow will escape taxation. The residential or non-residential status of an entity is irrelevant. Advance tax rulings are available on the question of whether or not for profits tax purposes trading income is deemed onshore and taxable or offshore and tax exempt.

Companies pay a standard rate of 16.5% on assessable profits. Businesses other than corporate entities pay a rate of 15% on assessable profits.


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