International Tax Planning

THE OFFSHORE OPPORTUNITY

Typically the following types of companies or corporate entities are used to structure international business and for tax planning purposes:

“Low or Zero Tax” Offshore Companies located in “Tax Haven” Jurisdictions

Very low or zero tax offshore companies incorporated in jurisdictions often described as tax haven islands, such as the differing types of offshore company that can be formed in offshore company formation centres such as the British Virgin Islands, Belize or the Seychelles.

“Offshore” Companies benefiting from favourable Tax Regulation

Offshore companies incorporated in jurisdictions which offer both offshore companies and onshore companies and which may benefit from favourable tax regulation and / or special offshore company regimes. For example:

Mauritius has two types of companies that are used for offshore business and international tax planning. The Mauritius GBCII Offshore Company pays zero tax and is effectively a tax haven company, similar in many respects to a BVI Company, whilst the Mauritius GBCI Company is tax resident and typically utilised for double tax treaty and international tax planning.

Hong Kong, although not typically regarded as a tax haven, has a favourable tax regime which effectively means that correctly structured, managed and administered Hong Kong companies can be utilised for undertaking offshore business and international business without paying tax in Hong Kong provided that any profits arising are not made in Hong Kong. This type of tax regulation is known as “territorial taxation”.

The LLC or Limited Liability Company and the LLP or Limited Liability Partnerships

These classes of company are used for offshore business, international business and tax planning because they have the advantage of limited liability but the flow-through characteristics of a partnership for tax purposes. By this, we mean that profits are divided amongst the members, in proportion to their respective holdings, and are taxed in their hands. In some circumstances, if all the members or partners are non tax resident in the domicile of the LLC or LLP company and no business is undertaken in that country, neither the LLC or LLP company nor the members or partners will be subject to tax in the company’s country of establishment. Such companies are said to be “fiscally transparent” and examples include US LLCs, the Isle of Man LLC and the UK LLP.

“Onshore” Companies

Many countries have tax regimes that are by statute tax advantageous for specific international purposes. These companies are often refrerred to as “Onshore Companies”.

The world of offshore is more complex than the black-and-white tax world inhabited by the media; offshore business consists not only of tax havens but also of onshore high tax countries competing fiercely to attract international companies and individuals with all manner of tax planning regulations and opportunities. These tax advantageous regulations are used for a wide variety of tax planning business, such as:

  • Double tax treaty planning relating to dividends, interest and royalty payments
  • The establishment of holding, international headquarter treasury and finance operations
  • Specialist business, for example, leasing
  • Personal and family wealth management and tax planning

In fact, almost all countries offer tax regulations of one kind or another to encourage inward investment.

International tax advisers have long been aware of the opportunities which exist for improving overall tax efficiency by using the special low tax regimes offered by high tax countries seeking to encourage international business. However, successful implementation of such structures is dependent on a wide variety of issues, often relating to matters such as anti-avoidance provisions, double tax avoidance, controlled foreign company and management and control tests and provisions, transfer pricing, thin capitalisation, participation exemptions, capital gains tax and a myriad of other ever-changing tax regulation. More recently, the weapons contained in the armoury of the tax collectors have been supplemented by exchange of information treaties and provisions.

So today the offshore world includes the expert implementation of specific tax advantageous structures domiciled in high tax onshore countries as diverse as the UK, Portugal, Singapore, Greece, Belgium, Austria, Spain, Switzerland, Luxembourg and the Netherlands.

OUR SERVICES

We are experts in advising clients on the selection of the best offshore company or onshore company jurisdiction for tax planning.

We then assist clients with the set-up process to establish the correct company or trust structure, and can provide a full management service to meet the statutory requirements of the structure. We also undertake the administration of the structure on an ongoing basis.

Our end-to-end service is designed to ensure a robust and comprehensive solution to meet your international tax planning requirements.

For further information on International Tax Planning please Contact us

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