Opening an offshore company can be a beneficial step for investors looking to make the most out of the business incentives in a jurisdiction. There are many examples of offshore jurisdictions and running a business via an offshore is not synonym with tax evasion. It is simply the incorporation of a company in an advantageous location.
The advantages of opening offshore companies in Singapore and Hong Kong are highlighted below, with emphasis on the tax and business benefits typical to each of the two jurisdictions.
Opening a company in Hong Kong
Hong Kong is an international business center and the Special Administrative Region can be considered an offshore jurisdiction because of the low tax regime, solid legal system and a simplified company formation procedure. The city is not considered a tax haven in the traditional business acceptance, nevertheless, it has a good reputation as a financial center and as the base for trading operations. The fact that it is located close to Mainland China offers a significant advantage for some investors when compared to other jurisdictions in the area.
A popular type of company in Hong Kong among foreign investors is the private limited company. Only one director is needed to incorporate this business and his information will be made publicly when the company is registered.
Hong Kong has a low taxation regime, with a corporate income tax of 16.5% levied on a territorial basis. There is no withholding tax on dividends and foreign investors benefit from protection against double taxation, owing to a number of double tax treaties signed with other jurisdictions.
Starting a business in Singapore
Investors in Singapore have access to a low tax rate, similar to that in Hong Kong, and to a simple and straightforward procedure for company formation and administration. In most cases, companies in Singapore are incorporated in as little as two days. Offshore companies in Singapore are most often involved in international trading and shipping. Other investors may use a company in Singapore as a holding company or to own real estate. Foreign entrepreneurs can open a private limited liability in this jurisdiction and offer international consulting services.
Singapore is a pro-business jurisdiction that allows foreign investors to hold 100% of the companies they incorporate and there are no special requirements for prior Government approval before opening a company.
Easy company formation, a low tax regime, and openness towards foreign investments are some of the characteristics of an offshore jurisdiction. Whatever the country of choice, entrepreneurs are advised to always seek legal counseling and services appropriate to their company formation needs in a certain jurisdiction.
