Top 6 Best Offshore Jurisdictions For Foreigners In 2024 (2024)

Factors to consider when choosing your offshore jurisdiction

There are many things to consider before determining the best place for your offshore company. Below are some helpful questions for your self-check:

Reason to incorporate:What are your expected benefits? Does the offshore location meet your needs? How to form the best offshore in the world?
Jurisdiction reputation: Does that offshore location have a stable economy, politics, legislative system, and corporate laws? Is it included in the “blacklist” or “grey list” by EU Council?
Taxation:Are there any special taxes or exempted status imposed on offshore companies? Under what circ*mstances may your company be liable to tax?
Entity structure: How many structures are available? Can you choose that business structure (e.g. IBC, LLC, Pte, or Ltd) in that jurisdiction?
Incorporation cost: How much is the incorporation cost? Which countries offer the lowest incorporation cost? Are there additional fees?
Compliance requirements: What are the reporting requirements for your company if it operates within that offshore jurisdiction?
Merchant banking: Do you need a corporate bank account to run your business in that jurisdiction? What are the options available? Does the country’s banking system allow the opening of offshore debit or credit cards, merchant accounts, or cryptocurrency accounts?
Processing time and residency situation: How long does it take to incorporate your company in that offshore jurisdiction? When moving offshore, are there any residency requirements for your company directors, shareholders, or company secretary?
The availability of tax treaties: Does that offshore country have any signed double taxation agreements or tax treaties that can apply to your corporation? Based on these inquiries, which countries are the top choices for establishing an offshore company? Let’s move on to the next section!

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Types of offshore jurisdictions categorized by tax incentives

One of the priorities for many entrepreneurs when looking for the best incorporation place is to optimize the company’s profit through tax incentives.

To seize the opportunity, you must understand how offshore jurisdictions are categorized based on the incentives they offer. These categories include:

Zero-tax jurisdiction

Often referred to as “tax haven”, these jurisdictions offer owners a tempting package of tax exemptions for all operations conducted outside their borders. In such jurisdictions, businesses typically only need to pay a modest annual fee.

This favorable regime encompasses no corporate taxes, the safeguarding of beneficiary owner privacy, and simplified duty-free submission of financial statements. Examples of zero-tax jurisdictions include the Bahamas, Bermuda, and Seychelles.

Low-tax jurisdiction.

These jurisdictions offer offer relatively lower corporate tax rates. Examples of these jurisdictions include Switzerland, Luxembourg, Ireland, and the Netherlands.

However, it’s important to note that these jurisdictions may not have Double Taxation Treaties (DTTs) in place, potentially resulting in double taxation for foreign businesses.

Beyond these incentives, it’s also essential to consider factors such as compliance requirements, reputation, accessibility, and cultural characteristics when choosing an offshore jurisdiction.

List of recommended entity types for offshore countries

The question is: what types of business would be the most beneficial to set up for your company? Let’s find out.

Anguilla

Recommended entity: the International Business Company (IBC)
Common uses: international trading, consulting, personal trading, and holding companies

Panama

Recommended entity: the Non-resident Corporation
Common uses: international trading, consulting, personal trading, holding, wealth management, investment, and private trust companies

Hong Kong

Examples of best offshore jurisdictions for foreigners

In this section, we will explore a selection of top jurisdictions available for international business endeavors and their distinct features.

Hong Kong

Hong Kong is listed among the most ideal countries for offshore company formation because of its strong international reputation and beneficial business schemes, including:

100% of foreign ownership
Business-friendly tax regime: Free corporate tax for foreign-sourced profits, low tax rate from 8.25% to 16.5%
Free sales tax, capital gain tax, dividends, and interest tax
No exchange controls
Open trade policy, competitive economy, the independent legal system
Financial hub with 75 out of the 100 largest banks in the world
Ease of access and entry point to mainland China

Among many choices, a Private Limited Company is the most common entity type in Hong Kong among start-ups, entrepreneurs, and those looking to form international trading businesses.

Advantages

Shareholder’s liability is limited to the number of shares
Any change in the company’s shareholders does not impact the existence of the company
The company can enter contracts, acquire assets, sue or be sued under its name
Transfer of ownership can be done wholly or partially by selling or releasing the shares

Disadvantages

The company needs to fulfill compliance requirements on an annual basis with CR and IRD
The identity information of shareholders and directors must be disclosed to the public
Maintenance and dissolution for Hong Kong limited company are quite complicated

Singapore

Singapore is another fast-growing commercial center in Asia. It is also known as the promised land for start-ups, entrepreneurs, and investors in terms of commodity trading and wealth management.

Some key highlights of Singapore’s business nature are:

Transparent tax scheme: Only transactions conducted in Singapore are taxed; the corporate income tax is capped at a rate of 17%
More than 70 tax treaties available between Singapore and foreign jurisdictions
Partial tax exemption schemes and various incentives for startups and investors, especially in fintech and technological innovation industries
Top-notch banking systems
High-skilled workforce, beneficial visa schemes for foreigners

A Private Limited Company is the most popular option here. Either individuals or body corporate can be shareholders of a Singapore private limited company.

Advantages

Shareholder’s liability is limited only to their shares
The company can own property, enter contracts under its name
Any change of members does not impact the existence of the company
The ownership can be transferred completely or partly by transferring to another
The company can enjoy many tax schemes for tax reduction

Disadvantages

Follow annual compliance requirements with ACRA and IRAS
Maintain accounting and other relevant documents

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British Virgin Islands (BVI)

The British Virgin Islands is a well-known tax haven. The reasons behind the attractiveness of the BVI are likely its ease of setting up a company and its cost-effectiveness.

Cayman Islands

The Cayman Islands is another well-recognized offshore jurisdiction.

It is a leading offshore financial hub, linked with economic and political soundness, offering a simple incorporation process, and a set of tax advantages for international entrepreneurs.

One widely-selected offshore business type in the Cayman Islands is a Limited Liability Company (LLC).

A Cayman LLC does not pay corporate tax for any earnings generated outside of its jurisdiction. There are no direct taxes, no exchange control, and the reporting requirements are minimal for LLCs.

Cayman LLC is also an ideal option for business seekers of asset protection, investment funds, private equity transactions, securitizations, movable or immovable asset holdings, etc.

Belize

Belize shines as a golden opportunity for overseas businesses, high-net-worth individuals, and international investors seeking to establish their presence in this captivating jurisdiction.

It offers a relatively competitive cost of formation, a swift incorporation process, and a set of preferable privacy policies and tax benefits.

As an offshore jurisdiction, Belize provides:

A straightforward incorporation process
A secure, democratic, and stable judiciary system
High level of confidentiality and privacy in terms of records of directors and shareholders regarding account-related information
A primary banking sector that supports businesses with a high liquidity ratio, remote bank account opening service, and low deposit requirements

Additionally, it is among the highest per capita income in Central America.

One of the most common business structures for foreign entrepreneurs looking to set up a business in Belize is the International Business Company (IBC). Belize is also among the fastest IBC Registry.

Recently, following the new Belize Companies Act 2022, Belize International Business Companies (IBCs) are being recognized as Belize companies, starting November 28th, 2022. IBCs or local companies no longer exist as they both share a single legal status of “Belize companies” with the same rights and obligations.

If this jurisdiction is still on your priority list, forming an LLC can be an alternative since LLCs remain excluded from being the subject under the ES rule.

RAK

Ras Al Khaimah, or RAK in short, is one of the seven fastest-growing emirates of the United Arab Emirates.

RAK has the highest degree of industrialization in the UAE, and it is the prospective destination for many foreign investors and business owners.

RAK company formation is now high in demand since it allows you to carry out almost all types of business activities, especially for holding companies, consultancy, financial service companies, investment, or international trading.

An International Business Company is a potential type of business to incorporate into RAK for the following reasons:

100% ownership of foreigner
Tax neutrality for foreign-sourced earnings
No obligation for a specific currency used as the company’s capital
No limit on bank transfers and deposits for share capital
Guaranteed confidentiality regarding the register of company members
No annual reporting or accounting requirements
Fast incorporation in 1 or 2 working days

Notice of Economic Substance Requirements

Effective from 1 January 2019, several offshore countries including the Cayman Islands, the BVI, Belize, and RAK have enacted Economic Substance Rules.

If your incorporated company (e.g. IBCs, LLCs, LLP, other than a domestic company, under the respective laws) falls under the in-scope entities of Economic Substance in those jurisdictions, your company must comply with reporting requirements and tax obligations (if applicable).

Best offshore company country for tax reduction

Which jurisdictions stand out when it comes to selecting the best offshore company country for tax reduction?

Panama

Despite the crisis, Panama, made famous by the Panama Papers leak, is still a suitable option for setting up an offshore business. Contrary to what the media portrays, it isn’t just used to conceal unlawful assets.

The country allows corporations to be established by a single director who can be a citizen of any nation and is not subject to local corporation taxation, audit requirements, or financial account preparation.

Cayman Islands

One of the most well-liked choices for offshore hedge funds and offshore businesses is the Cayman Islands. The 0% business tax rate is the major justification. There are no withholding taxes, capital gains, profit, income, or similar taxes.

Moreover, its offshore business renewal and registration costs are cheaper than those in other nations.

The OECD and the International Financial Action Task Force both have the nation on their white lists. In contrast to other tax havens, it complies with international tax legislation.

Cyprus

Cyprus is a great option if you intend to join Europe because of its membership in the EU. It has been a member since 2004 and, as of 2008, it has also been a member of the Eurozone.

Your company will receive an Intra-Community VAT number to conduct business within the Eurozone.

Unlike some EU nations, Cyprus imposes fewer regulations regarding company structures so you are also not overly constrained. Additionally, there are no minimum capital restrictions.

Despite not being as widely known as other Caribbean tax haven nations, it boasts one of the lowest tax rates, specifically at 12.5%.

Cyprus’s exclusion from the Automatic Exchange of Information is another perk for investors in this nation (AEOI). This implies that you are not required to provide your bank account information while opening an offshore bank account here.

To wrap up

To select the ideal offshore jurisdiction for incorporation, dedicate time to research and consider factors such as reputation, trustworthiness, tax policies, and compliance requirements. Narrow down the options to find the most suitable choice.

Additionally, you can work with a reliable offshore company formation service provider like BBCIncorp to simplify the process. We offer fast and transparent corporate services, including company formation, bank account opening, etc.

Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.

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