Global Business Service Agency: legal services for business
Global Business Service Agency provides services in the field of tax optimization. Our experienced professionals help clients with the opening and maintenance of offshore companies and opening bank accounts. GBS Agency organizes and supports the work of companies on all continents.
For better understanding, all the requirements and opportunities for international business, you need to know what types of offshore zones exist and what principles they share.
Classification of offshore jurisdictions
Classic offshore or zero-tax zones
Usually, it is small in area or population of the state or autonomous units within the developed countries, with average level of economy and confident stable political situation.
There are no requirements for financial documentation and tax audit. Zones are characterized by minimal conditions for opening a business, as well as high confidentiality of information about the beneficiary and founders. The minimum condition for opening a new business is to pay a state fee and / or state duty to the treasury. Such jurisdictions are usually included in black lists of offshore zones, which does not prevent entrepreneurs from using them to accumulate capital, increase investments, reduce tax burdens or export trade. The British Virgin Islands, Nevis or Seychelles are considered to be the most popular.
Onshore or countries with low tax burden
There are usually countries with a growing economy, where to attract new investments and increase the state budget; favorable conditions for incorporation are created. All companies in these zones are obliged to submit financial statements and pass the tax audit. The organization of business in these jurisdictions is aimed at conducting trade with those States that are negatively related to the classic offshore. Among the onshore most popular are Cyprus or Ireland.
Jurisdiction where the territorial tax system is in force
In these jurisdictions, the taxation system is directly dependent on the territory of registration and business activities. If the company receives income from operations outside the state, the entrepreneur is exempt from most of the taxes or pays the fees at reduced rates (exceptions are state fee and duty). The evidence of the source of income and the place of receipt is the financial statements of incorporations. The zones with the mentioned system of taxation include Panama, Singapore or Hong Kong.
Jurisdictions with special taxes or high tax rates
The system of taxation on the residence of the company is widespread in these zones: regardless of the location of the source of income, if the recipient company is recognized as resident, it pays taxes on equal terms. In such jurisdictions, rather high rates of fiscal charges and obligatory delivery of financial annual (quarterly) reporting. There are a number of special taxes, which apply to certain types of companies, depending on the legislation on incorporation. Individual forms of business that are partially or wholly exempt from corporate taxes or pay a general special fee include:
- Company LLC. These are firms where shareholders must be non-resident jurisdictions who are responsible for the results of the company's activities only within the share in the authorized capital. In proportion to the share, the shareholders also distribute the entire income of the company, from which taxes are levied as with individuals. It is also a prerequisite for exemption from corporate fees to conduct business activities outside the country in order not to fall under the local tax system.
- LP or LLP partnership. Limited liability partnerships are highly popular in order to minimize tax burdens, as in most jurisdictions this legal form has a special status. All income is distributed between the accounts of the partners as in the case of a joint stock company, and only after the declaration is taxed. If the partnership operates outside the boundaries of the jurisdiction and the partners are not residents, LP and LLP are exempt from taxes on the income of legal entities. The most common and characteristic are the partnerships of Scotland and the UK.
- Companies with special status. These incorporations or representations are brought to the priority, undeveloped or complex segments of the country economy. Such conditions are offered in industrial, innovative, technical, port and free-economic zones of jurisdictions, subject to a number of rules (distribution of copyright, partial participation of the state in the capital, etc.).
Therefore, choosing a zone for expansion of business opportunities, first, it is necessary to pay attention to conditions of opening of the company, rates of taxation and priority of the zone of the future management.