The fastest way of becoming the owner of an offshore company is buying a shelf company. There is a wide choice of shelf companies in the market and some options are attractive indeed. However, buying a ready-made company is also associated with certain risks. First, fraudsters can try to sell the same company to several people at a time. Second, you might end up buying a company with debts. Besides, when the owner of the company changes, its old bank account cannot be used in most cases. Thus, you will have to open a new bank account anyway. If you want to play safe, you should probably register a new offshore company from scratch rather than buy an existing company.
Why do people buy or register offshore companies? There can be different reasons for that including the following ones:
- To enter international markets;
- To reduce the fiscal burden;
- To protect the assets;
- To launch a new business venture;
- To make investments in foreign countries, and so on.
Most people register offshore companies to legally reduce their tax burden and to acquire efficient legal protection of their assets. An offshore company can bring more benefits that you can find out about if you follow the link.
When buying or registering an offshore company, you have to have a clear idea why you need one. First, you should choose the jurisdiction where you would like to have an offshore company. Then you should clearly define your goals, develop a business plan, open an account with a reliable bank, and find a law firm that is knowledgeable about the corporate legislation of the country where your offshore company is registered. Professional assistance is plainly necessary if you would like to register (let alone buy) an offshore company.
Let us look at three jurisdictions where you could register an offshore company: Hong Kong, the Marshall Islands, and the island of Nevis (part of the Federation of St Kitts and Nevis).
A company in Hong Kong
Hong Kong boasts simple and transparent corporate legislation and a flexible taxation system. If you do everything right, your Hong Kong-based company can bring you a hefty income.
Hong Kong ranks higher for the ease of doing business than the USA and Japan do. What city is home to the largest number of billionaires? It’s Hong Kong!
Advantages of doing business in Hong Kong
- A stable banking system;
- Active trade operations: a huge number of business deals are made every day. If you have a company and a bank account in Hong Kong, you will have a very serious competitive advantage;
- One of the best legal systems in the world: Hong Kong courts of law are totally independent from mainland China;
- Minimal restrictions on the types of business activities;
- A superb choice of investment opportunities;
- A highly beneficial geographical location: Hong Kong can become your gateway to China, an enormous market indeed;
- An open economy;
- State support for business ventures;
- Minimal business risks;
- If you would like the information about your Hong Kong company ownership to remain confidential, you can hire a ‘nominee administration’. Nominee services are legal in Hong Kong and they don’t cost too much. Your name is not going to be listed in the Business Register if you hire nominees in Hong Kong.
Disadvantages of doing business in Hong Kong
- High cost of company registration;
- Closing a company can be difficult: closing an Ltd company also costs quite a lot;
- Annual audits are mandatory;
- Acquiring banking services in Hong Kong can be a challenging task for a foreigner;
- The company has to have a brick-and-mortar office in Hong Kong: you could not get away with a virtual office or just a legal address;
- A local company secretary needs to be hired;
- Rent is expensive;
- Telephone, Internet, water supply, electricity supply – all utilities are extremely expensive in Hong Kong.
Buying a shelf company in Hong Kong
You can also buy a ready-made company in Hong Kong because the local legislation allows this. If you need to act fast to sign a lucrative contract with a Chinese firm, for example, you could consider this opportunity. You have to do your math, however, and make sure that your ultimate profit will exceed your costs. You can buy a company with a bank account or without a bank account in Hong Kong. In the former case, the company is going to cost twice as much.
A company in the Marshall Islands
The Marshall Islands is often referred to as a tax haven. The jurisdiction is well-known in the international business world. It is possible to register or buy an offshore company in the Marshall Islands. The country’s legislation efficiently protects the assets of the companies that are registered there.
In addition to that, your company can be tax-exempt in the jurisdiction if you meet certain requirements. Namely, you should conduct all your business operations outside the Marshall Islands. Other advantages that registering or buying a company in the Marshall Islands include the following ones:
- Zero taxes;
- Company ownership confidentiality;
- Protection against raiders;
- Low IPO costs;
- Lack of reporting requirements;
- Lack of currency control;
- Protection from lawsuits.
Any foreigner, regardless of his/ her country of origin can register a company in the Marshall Islands. The registration timeframe is only 5 to 7 business days. The company registration and maintenance costs are low, which is a serious advantage of the jurisdiction. Besides, the Marshall Islands are off the black lists compiled by the EU and other international organizations and doing business from the jurisdiction is unproblematic.
A company in Nevis
Nevis is one of the most advantageous offshore jurisdictions that allow solving a wide spectrum of business tasks. (We must note in parentheses that this is not exactly true for its ‘big brother’, the island of St Kitts.) Entrepreneurs from different countries choose Nevis because of its legislation providing a high level of confidentiality protection. Nevis is one of the last pillars of economic freedom in a sense. Its legislation is an efficient mixture of English and American legal systems.
The legal system has been stable in Nevis for many years, which means that you can safely plan ahead without worrying that the rules of the game may change. What advantages does Nevis offer to foreign entrepreneurs?
Non-resident companies carrying out their business activities outside the jurisdiction are exempted from the following taxes:
- Profit tax;
- Capital gains tax;
- Inheritance tax;
- Gift tax;
- Corporate income tax.
No currency control is applied in Nevis either. Finally, the local legislation makes buying shelf companies legal.
Without doubt, there are other jurisdictions that you could consider for registering or buying an offshore company. Your ultimate choice will depend on your top priorities and main business objectives. In any case, however, we suggest that you should seek professional advice on the matter.
