Why using offshore companies as your global business ?


Offshore Company Formation


How to define offshore company?

Company acts, ordinances or other rules governing a company’s operation and structure, each of them fails to provide a definition of the term “offshore company”. A definition of company’s type is different in every country and depends on its rules and regulations. For instance, you will find a company with Llc or Inc in its title in U.S.A commonly, whereas in United Kingdom, the name of the company accompanied by an Ltd or Limited. For France, there is a common use of Sarl, the German type of company is usually accompanied with Gmbh in its name and in Italy, it is Srl and so on. These companies are classified as either of the following:

  • Limited or Unlimited
  • Local or Overseas
  • Listed or Unlisted
  • Private or Public
  • Holding company or Subsidiary

In the world of business, an offshore company may find a practical usage under the ownership of someone who wants his business to be taken to countries that are foreign to his business. Hence, it will not be wrong to term offshore company as the one that is incorporated under the laws of foreign countries, and these laws and their corresponding countries should not be under any kind of rule of the country where the business was initially being conducted. According to encyclopaedia, an offshore company has the trait that it is formed under the jurisdiction of a country which is not influenced or ruled by the country where the business was initiated.

Why to form offshore?

People who intend to expand their business at an international level, like forming an offshore company more as compared to forming a company at the local level. There are certain reasons for it. The following benefits are attained if an offshore company is formed:

  • Advantage over taxes on profits: If with a careful planning a company is run, its profits can be saved from any imposition of taxes, or at least the amount of taxes can be reduced to a great level.
  • Ease in registering the company: Usually, the registration of an offshore may take not more than one day. Also, particular types of offshore companies have the advantage of registering themselves with just one person at the time of incorporation.
  • Public search: According to the type of offshore company it may or may not be given the permission of public search.
  • Incorporation charges: In terms of charges, the company being formed offshore may be costlier than others. However, some offshore companies’ costs is limited to 100s of dollars and some cost up to thousands of dollars.
  • Reporting about the company: It is important for some types of offshore companies to prepare a report on a regular basis mentioning about the affairs of the company, such as the administration whereas for others there may be no such requirement.
  • Liability: The offshore companies are usually private and offer limited liability to their members. Therefore, the members of the company have to pay a limited amount of money on their corresponding shares.

However, as the pros of offshore company make it a suitable option, the cons of an offshore company formation are still there. Following are the disadvantages of incorporating a company that is offshore:

  • Gathering financial assistance: Financial assistance is not provided so easily to an offshore company by the banks. Even when the company has large gains on earnings and offers its assets as a guarantee to the Banks, they do not give in that easily.
  • Forming accounts in offshore Banks: As there are no records publically accessible, forming accounts in offshore banks becomes tough. Additionally, the banks are reluctant of providing the service of bank account to offshore companies.
  • Restrictive nature of business: Businesses that can be run under the name of offshore company are of limited type. These may include consulting business, international trade, corporate bodies’ shareholding etc. and not include finance type or insurance or trust type businesses.

Which jurisdictions are suitable for offshore companies?

Some of the jurisdictions are more appropriate for the formation of an offshore company. As such:

  • Singapore
  • Seychelles
  • St. Lucia
  • Anguilla
  • Belize
  • St. Kitts
  • Switzerland
  • Barbados
  • British Virgin Islands (BVI)
  • Malaysia(Labuan)
  • Brunei
  • Bermuda
  • Cayman Islands
  • Turks & Caicos Islands
  • Delaware (USA)
  • Cook Islands
  • Guernsey
  • UK
  • Mauritius
  • Samoa
  • Vanuatu


  • Marshall Islands


  • Hong Kong


  • Nevis


  • St. Vincent and the Grenadines


 

How to choose offshore company?

When you are to form an offshore company, a question may arise that how should an offshore company be chosen? Generally, many jurisdictions provide rules for the formation of such company, but they all have usually many traits in common. Such as:

  • Documentations at time of incorporation: Every jurisdiction normally, makes it mandatory to prepare the memorandum and the articles of association of a company for forming the company. These documents should govern the operation of the company and mention that how the authorities have been distributed in the company among the directors and the members.
  • Document of certification: When the process of incorporation is lawfully completed, the newly formed company is given a certificate of incorporation as a proof that the company has a legitimate existence now onwards.
  • Appointing a secretary or an agent: An offshore company also has to appoint a secretary or any agent at the local level whose duty is to manage the communications done by the company at an official level.
  • Registering the office: It is equally important for an offshore company to register its office and then notify the Companies Registry that the registered office has been given the duty to receive the official documents of the company.
  • Proprietorship of the company for the members: The members who hold shares in an offshore company at the time of incorporation and preparation of memorandum and company’s articles, are deemed as the owners of the company. But their role will be limited to investors of the company and will not be given the company’s governance.
  • Directorship in an offshore company: While incorporating a company and its memorandum and articles, the members, who own shares, should choose the persons who will be given the directorship of the company. The directors will be deemed as the managers of the company and as employed by the company. They are not the investors of the company.
  • Maintenance of statutory records: The particulars of shareholdings in the company, secretary, share capital, and the alterations brought in any of these should be mentioned in the records of the offshore company by the virtue of company laws.
  • Renewing licenses: Every year, it is must for an offshore company to renew its licenses, under almost every jurisdiction. Along with the renewal, the data related to the external or inner matters of the company should be kept up to date.

We believe, some jurisdictions are more relevant to one another as compared to other jurisdictions. For example, the following areas:

  • Belize
  • Mauritius
  • Marshall Islands
  • Seychelles
  • Nevis
  • Cayman Islands
  • Samoa
  • Hong Kong
  • British Virgin Islands
  • Delaware (US) and UK



Which ones are the best?

The jurisdictions of Cayman Islands, British Virgin Islands, Hong Kong, Belize, Mauritius, UK, Nevis, Seychelles, Samoa, Delaware (US) and Marshall Islands have many features that are common to all of them. Also, their pros and cons are quite similar. Problems or unpleasant circumstances may arise for any offshore company. There are chances that after the formation of your offshore company, your company gets stuck in any similar situation. Hence, a case study about a serious issue relevant to an offshore company has been mentioned below. 

Mr. Simon used to run his business of international trade quite well. There was a large margin of overall gains on the earnings of his business. The business was started in Hong Kong. He got the registration of an offshore company done under the law of BVI. Also, he setup an account in an offshore bank. After the passage of few months, his account was suspended by the bank. A letter was received by Mr. Simon from the bank which mentioned that the bank had suspicion over the money of Mr. Simon in his bank account. The bank also demanded Mr. Simon to give evidence for the source of money. He had to visit Hong Kong to resolve the matter. He met the manager of the Bank and told him that the source of money was his business of international trade. Nevertheless, the manager demanded an evidence in the form of records. But Mr. Simon countered the demand by stating that his business was overseas which does not require any maintaining of records at all. And he was not pursued by his agent to register all the documents and records to the registry of BVI companies. Hence, the manager apologised from helping Mr. Simon due to absence of any proof. And the bank account was kept suspended till any other order was given. Mr. Simon took the case to the court, but all efforts went in vain. Similar actions are being taken in different countries that may include, the United States, countries of the west and Europe, as well as BVI, Belize etc. 

The question that arises in the minds of those who want to open offshore companies is that, why is this happening? Do you believe that there are no profits in offshore business? Is that a demand by your side to register a local company instead? When my country imposes a taxation of almost half of the profit gained. And the charges are higher for companies in the States of America, same is the case for companies in the United Kingdom, Canada etc. Then what option should I opt for?

We have come across many cases where the importance of protecting the money in offshore accounts has been neglected leading to some serious issues. There are only two possibilities for the outcome of an offshore business, either it will flourish or it will fail. Flourishing business brings a lot of earning in return which will obviously be stored in offshore accounts. A solution can be to transfer all the money to any domestic account or to any other offshore account. But it might not be that safe. Because there have been situations where some Governmental authorities made it a compulsion to inform the government about any transfer of the money from bank account or similar transactions. Under the rules for prevention of money laundering or evading the tax, the international as well as local bankers have to be very careful while making any transfer of across the border bank accounts. Then what can be done? 

There is nothing to panic about. Because we present to you one jurisdiction which has the safest regulations regarding this matter. It is the Hong Kong Jurisdiction.

 

Why company in Hong Kong?

As the city of Hong Kong is international, it is also why many people intending to make any investment give preference to Hong Kong for the registration of their offshore company. Here are some other advantages of registering an offshore company in Hong Kong:

The economic framework of Hong Kong involves least intervention of the Governmental authorities of Hong Kong. Being the top most independent economy system as proved by the global statistics, it is quite open and market oriented. Moreover, it is an open option for the investors to choose the type of their business.

Flow of money between the Hong Kong and different other countries are subjected to very few restrictions and check. There is no such restriction on the currencies, for instance, US Dollars, Yen of Japan, GBP etc. are easily accepted for payment between Hong Kong and countries in the rest of the world.

The business transactions related to offshore companies are subjected to 0% tax. It is assured by the tax law of Hong Kong that the tax on profits is only subjectable on local businesses. Any of overseas business that has its registration in Hong Kong will be deemed as an offshore business and there will be no imposition of any tax upon the profit at all. Take the following case as an example: if any person having company incorporation in Hong Kong does trade by buying goods in China, and then trade them to USA, as long as this is not done on the grounds of Hong Kong, then any gains made on the trade will be considered as an offshore profit and hence will not be taxed.

Rate of taxation is quite low: Suppose the business is being conducted on the grounds of Hong Kong, the business will then be taxed. However, the rate of tax is so low. It is almost 16.5% of the gross gains made by the business. And there is no additional tax such as VAT, tax on capital gains or business etc.

Method of formation:  There are few requirements for forming a company in Hong Kong. Any person who is not the national of Hong Kong can be made the director and a member holding shares in the company. Only professional corporate bodies that are local have to appoint secretary and inform about the address of the registered office.

There is no need for investing capital. The shareholder just has to be a signatory to the memorandum and articles of the company, declaring that he will make contributions in company’s capital. So it is not required by the shareholder to make remittance of any finance to the company.

Independent usage of the company’s title: There are countries where the freedom of usage of certain types of company’s name is limited. These names may include: Group, International, Holding etc. But Hong Kong provides independence for making use of such names, given that such names of companies are not already filed in Hong Kong.

The process for setting up an account in an offshore bank is quite easier in Hong Kong. It is mandatory for the applicant to submit a copy of his passport, the documents of registration in Hong Kong, proofs of address and he should also describe the nature of his business. The international bankers accept these documents and setup the company’s account with several currencies within few days or some times within one day. Moreover, the banking facilities via internet are also given to the businessmen.

The legal structure works under the common law that is imposed in the United Kingdom and Commonwealth states.

Usually, the companies in Hong Kong are private limited.

It is permitted in Hong Kong to establish a structured corporate. That means, any offshore company can be assigned the status of shareholder and directorship of any company in Hong Kong. As, a company in BVI can be assigned the directorship and shareholding of any company in Hong Kong.

The law of trust can be applied to Hong Kong. Suppose, any person making an investment, wishes that his identity remains concealed, then he can do it so by assigning a trustee as a beneficiary to his shares, and he may keep a trust deed for evidence of his ownership over the company. However, in different other countries, laws related to trust cannot be imposed for instance in China.

It is necessary to maintain yearly records of the company as well as to register the statutory audits every year to the tax departments.

Apparently, the last point does not seem much like an advantage. But it is quite advantageous and a strong reason for choosing Hong Kong as a company. However, the basic important laws of Hong Kong should be understood before proceeding further. 


By the virtue of regulation given by Hong Kong’s Inland Revenue Department (IRD), the maintaining of records of a company’s and accounts is compulsory as per Section 51.  This will assist in checking the gross returns, loss, expenses that are generated by the business and the tax on them.

As mentioned by Section 14 of IRD law, taxes will be imposed on gains generated by a business that is conducted in the region of Hong Kong. Hence, any business that is not carried in the boundaries of Hong Kong is not obligated to pay any tax on profits. For instance, the cases of HK-TVB and Hang Seng Bank are evidences to the law of no tax on overseas profit.

Under the companies’ laws of Hong Kong, it is a compulsion on the companies in Hong Kong, to maintain the company’s records in companies register. This will make it easier for preparing financial statements on a yearly basis. This task can be assigned to person who will then keep the accounts audited and make a report dealing with all the transactions happening in Hong Kong’s region.

Why is this process done? There are two purposes for it. The primary reason is that these reports need to be presented in annual general meetings, so that the shareholders are given a chance to analyse the auditor’s reports and give their consent to the audited accounts. The secondary reason is, the persons who are making investments have to submit these documents to the IRD. Also, it is important to make IRD aware that the profits of the company are large after carrying out the business, so an exception should be given, by virtue of which no tax on profits will have to be paid. Also, the government holds records about the legitimacy of the business that you are running.

This process for running offshore business does not exist in any other part of the world. Let’s summarise its steps:

  • The records of an offshore company are maintained and its accounts’ details are also recorded.
  • The job of auditing the company’s accounts is handed over to a person who is specially appointed for this purpose.
  • Every year, a general meeting is conducted, where these reports are shared with the members and then they assent to the audited accounts. The reports are also shared with the IRD.
  • The files about the audited accounts are given to IRD for claiming that no tax should be applied on the profits of the offshore business.
  • After that, a permission is granted by the IRD to not pay any taxes on profits to your company business that’s outside Hong Kong. For elaboration, go through the letter’s sample in the section of Order form.

As an investor, you will own an offshore business whereas there will only be a need of appointing an auditor who audits your accounts and maintains the records and helps you in your paperwork related to the company. Auditor will also produce annual reports of audit accounts and request on your behalf to get exemption from tax on gains. You will be saved from taxes even when overall earnings increases up to billions.


What role do you play? Why are you giving all this offshore information?

The name of our company is Stephen M.S. Lai & Co CPA limited. It is a CPA company that works on a global level. It is present in Hong Kong, which is known as an international city at the commercial level. Our clients belong to different parts of the world. We give our services to people investing at global level and the services include:

  • Incorporating Hong Kong company
  • Incorporating offshore companies
  • Opening accounts in offshore banks
  • Establishing the Chinese WFOE
  • Consultation
  • Company secretary
  • Arranging accounts’ auditing
  • Planning of company taxation
  • Trust setup

Mr. Stephen Lai is the Sr. Partner of our organization, Stephen M.S Lai & Co. CPA Limited, having a set of qualifications including ACCA, MBA, PDA, HKICPA, PCA, and LLB from world-known institutes 

Trust Arrangement

We will produce two sets of documents. One of them will include the contracts regarding trusts and the other one will be the Power of Attorney (POA). It will be stated in the trust contracts that our company will hold the position of trustee by nominating shareholders and we will declare that the shares will be held by us as beneficiary. Your company’s identity will not be revealed this way. To legalise the documents, they will be stamped. The natural nominees of directors and the corporate nominees of directors will be given via power of attorney and give out the managerial authorities and assent that you may whenever you like sign company’s agreements by the virtue of POA.

For the expansion of client’s business across the borders, the services, knowledge and experience of our firm, proves helpful. The nature of the businesses being managed by our clients may be either consulting, producing goods or trading etc. The clients may be nationals of Hong Kong, overseas countries or Mainland China.

We are providing our services in following six bank networks:

  • Offshore banks process remotely
  • Hong Kong banks by visiting
  • Singapore banks by visiting
  • Switzerland banks process remotely
  • European banks process remotely or requesting for remote process
  • UAE banks by visiting or remotely

We can provide the service of setting accounts in offshore banks, also we have a refund policy. It will be very helpful if you send your case to us first, so that we can have clear look at it before accepting the order.

These are the international banks where the process can be carried out remotely by our firm:

  • Andorra
  • Mauritius
  • Vanuatu
  • Anguilla
  • St. Vincent
  • Antigua
  • B.V.I
  • Seychelles,
  • Cayman Islands
  • Panama
  • Cook Islands
  • Nevis
  • Lebanon
  • Belize
  • St Lucia


Through our firm’s help, you can open account in any of these international banks, without paying visit to these banks under all the jurisdictions. These documents should be submitted:

  • Documents of company incorporation
  • Passport copies
  • A copy of proof of address (keep in your mind that few of the bankers, may ask for proofs for business if the clients are nationals of high risk countries such as North Korea etc.)

The terms and conditions for setting up accounts are different for every bank. Therefore, we will have to go thoroughly through your case to decide which bank will suit your company the most. Hopefully, your business will get expanded by our help and you will cherish a tax free policy for profits.


What if I want a Hong Kong bank? 

With the help of our firm, you will be able to open a bank account in the following Hong Kong’s banks:

  • HSBC (Hong Kong)
  • ICICI Bank (An Indian Bank)
  • Public Bank
  • Dah Sing Bank
  • OCBC Wing Hang Bank
  • Bank of China
  • Nan Yang Bank
  • China Citic Bank
  • DBS Bank
  • CitiBank (Hong Kong)
  • Hang Seng Bank


Our firm will provide you the service of getting ready the documents that are the requirement of the bank. Also, an appointment will be arranged by us for you. And the submission of the documents required by the bank will be done by us. We will hand over to you an account number, a token, a password and a debit card for your company in just a few matter of time. It may happen in some cases that a client is handed over all these things in some hours. The total period that will be consumed for completing the process will depend upon which country the client belongs to, the sufficiency of requested documentation, and the type of business being conducted. The current rules of the banks will determine whether the appointment is arranged or cancelled.


Is it possible you can open a bank account in Hong Kong without a visit?

Some old companies are associated with us, and they have active bank accounts in the banks of HSBC Hong Kong as well as Heng Seng. We will provide assistance to you in making a transfer of the proprietorship and account of any old company to you. We may do this remotely. For any other query please email us.

We also do business with banks that can open bank account for you remotely if we request especially for it. For any other query please email us.


What services you can provide for Singapore bank account? 

When your demand is to setup an account in banks of Singapore by visiting, then we are here for your help. We arrange meeting with the bank and submit the requested documents such as company’s incorporation documents, passport, documents proving the address and relevant paperwork. We will send the papers to the Bank prior your visit to the Bank. Firstly, you’ll have to decide that which bank you want to keep an account in. After that we will send your papers to your decided bank so that they get verified by the bank and the bank give a pre-approval. We will choose an appropriate date and timings for the meeting on your behalf. So for this, you can tell us about your timetable and your suitable time and date for the meeting. The meeting’s duration will not exceed 30 minutes. And in this duration the account will be setup.

You can notice that, because we will get your meeting pre-approved, you will no need to stay in any hotel of Singapore as the meeting in just for couple of minutes.

We also provide services for European banks and here is the list of countries where we can arrange setup for you:

  • Austria
  • Portugal
  • Croatia
  • Monaco
  • Cyprus
  • Luxemburg
  • Czech Public
  • Liechtenstein
  • Estonia
  • Latvia
  • Finland
  • Hungary
  • Germany

We can also open bank accounts for client remotely in Switzerland, or in UAE remotely or by a visit.

For any query, feel free to contact us.


What should I do next?

The task next to be done by you is filling the form of incorporation. We will go through your case to suggest the best suitable option of bankers for you. We can assure you that by our services you will be helped in setting up account in offshore banks as well as the transaction of your business in overseas will not be subjected to any tax by law.

The reward of best partners with the banks of HSBC and Heng Seng were given to our firm from 2008 onwards to 2012.

So, go to the section of Order form, download it, and enter the required information in it. After that, email us. The relevant documents will be prepared by the staff of our firm. We will share them with you to get your signature on them. Also, the documents of Bank will be shared with you. If there is any ambiguity, please feel free to contact us.


Forming a company with the help of Stephen M.S Lai & Co CPA Limited, will also give these in the package charge (kindly check concerned jurisdiction’s heading):

  • Original incorporation documents
  • Incorporation certificate
  • Free name check
  • Structuring the Articles
  • Certificate of getting the business registration
  • 5 copies of M & A printed
  • Statutory details
  • Share certificate
  • Signature chop
  • Round acknowledged chop
  • Black file
  • A copy of certified incorporation documents

At present, we are also giving these services including the above documents:

  • Appointing company secretary and local agency for a period of one year
  • Business address and a registered office for a period of one year
  • Free mail forwarding for a period of one year
  • Free public telephone and fax line for a period of one year

So go and download the form right now!