Intensified competition in the world markets and the wish to protect own capital prompts many entrepreneurs to seek for tax haven countries, where on one hand the tax burden is reduced, and on the other hand, all the necessary business opportunities are available. And this choice should be made from the very beginning, in order not to think about how to transfer your business to other offshore country after. However, it should be noted that choosing a country from the tax haven countries list, it is important to clearly understand what your business will do, accordingly, what opportunities and limitations will be essential for you, and what you can turn a blind eye to.
When it comes to choosing the best offshore countries, and you start looking for information on the Internet, the descriptions and comparisons of different offshore jurisdictions, you can find inconsistent and incomplete information that can become a potential source of problems in the future. For example, you have chosen a jurisdiction with a minimum tax rate, but when you start the registration process, you suddenly find out that you can open a company, but you will not be able to open an account in a local bank, or simply there are no suitable premises for your business (warehouses, industrial facilities, etc.), or you will not be able to hire the needed specialist (there is no one available on the local market). As a rule, these things are not told about, but they are so important that cannot be ignored. There are jurisdictions offering a minimum tax rate; there are best countries to open an offshore bank account, there are those that offer a good infrastructure – you must choose the optimal set for your business. For example, what is the benefit of offshore, if no bank will agree to open an account for your company, or all transactions from your offshore bank will be blocked, denied or included in the category of suspicious transactions. Therefore, when choosing the best option from the offshore countries list, the issue should be treated comprehensively, and most importantly – it is necessary to contact local consulting or registration companies to immediately find out all the issues of the interest for you. In addition, when you have already started to consult with regional experts, it is superfluous to find out about the prospects – whether the tax system will change with the growth of your business. All these are important questions, the answers to which must be obtained before you begin the registration process because correcting errors will be much more expensive then.
Assessment of the reputation of the best offshore countries
Now let us distinguish such a notion as the reputation of an offshore jurisdiction. The reputation of jurisdiction is important first of all for you, as for the business owner. Reputation in many ways is the key to successful business, for example, in some countries (the United States, Norway, and Sweden) there are special rules when dealing with companies from offshore jurisdictions, and this is a source of potential problems.
So, let's move on to assessing the reputation of the jurisdiction. There are a number of criteria and factors to consider here. Here are the main ones:
- Political and geographical stability. When choosing the best country to open an offshore bank account not only economic issues, but also the domestic policy of the country should be taken into account. And if there is at least the small suspicion that a violent change of power, civil unrest, a state of emergency, etc. is possible, it is better to avoid such an option. It's unlikely that you want to lose your business and money because of a natural or human cataclysm.
- Advanced financial system. Probably, it makes no sense to explain why a company and a bank account should be in one country. UAE can be identified among the best countries to open an offshore bank account. Local banks will open an account for a foreigner: an individual, and an offshore, and an onshore company. Local banks are known for their stability and respectability, and at the same time, the requirements for opening an account are much simpler than in Swiss banks, for example.
- Corruption, legality, and freedom. As you understand, there will be nothing about this phenomenon in the description of any of offshore countries, but corruption can literally destroy your business, leveling out any advantages that such a "best offshore country" offers. A country with corrupt courts and corrupt law enforcement agencies is not a place to which you can entrust your business assets. On the other hand, the jurisdiction that you choose should not depend on decisions and actions of other states, so that decisions and laws of foreign states cannot affect your business and bank accounts. An example is the British Virgin Islands, (a territory dependent on the United Kingdom).
Best 5 offshore countries
So, let's look at some of the most popular offshore jurisdictions.
- Cyprus. A very popular offshore country. Local legislation is considered to be one of the best among other offshore jurisdictions. There are good opportunities for optimizing tax costs and saving assets. Local banks can be considered reliable, and the corporate income tax rate is 12.5%, VAT is up to 15% (the lowest rates in Europe).
- Seychelles. This offshore jurisdiction specializes in financial services, that is, local banks provide better conditions for foreign companies. Offshore companies are completely exempt from taxation, and there are no strict restrictions on registration of a non-resident company. The geographical remoteness and limitations of the possibilities associated with it are among the shortcomings. However the clear drawback that opening open an offshore bank account for companies from Seychelles has become very hard.
- The United Arab Emirates. It is one of the fastest growing economies in the world. The local authorities managed to create the very favorable environment for foreign investors in its numerous free zones. There are no taxes on profits, well-developed infrastructure, and banking sector. Reliability, stability, simplicity, and comfort – all these are about the UAE. And bank accounts for such companies can be opened in the country.
- Panama. Panama is a very popular offshore country. Here you can count on confidentiality and reliable protection of assets, at the same time, the cost of service in the country is quite low, which is ideal for a newly formed business. The tax rate is zero. However, to open offshore bank account bank, the situation is similar to Seychelles companies - opening an account for Panama companies has become extremely difficult.
- Hong Kong. Hong Kong is a modern innovation center that does not belong to the classical offshore jurisdictions. If a company registered here does not get profit in Hong Kong itself, it is exempt from tax. Local banks are famous for their reliability and stability, and security. But you need to be aware that the banks have high minimum account requirements and the business shall be ideally linked to Hong Kong in order for the account to be opened.
So, when choosing tax haven countries from the tax haven countries list, you need to be very careful and comprehensively approach this issue, assessing all potential pros and cons. The ideal choice is a jurisdiction with low tax rates, good reputation (not in the blacklist of FATF countries) and broad infrastructure opportunities. In our opinion, the UAE most closely corresponds to these conditions. There are tax privileges in the country (there is no income tax and other types of income taxes), the banking system is reliable and predictable, the infrastructure allows to deploy almost any business, all legal procedures, puffiness, and audit are simplified as much as possible, and most importantly – the country is not included in any blacklist of countries.
