February 22, 2019  09:43


February 22, 2019  09:43


February 22, 2019  10:43

   


February 22, 2019  14:43


February 22, 2019  09:43


February 21, 2019  19:43

   


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Contact Us
Hong Kong
+852­­ 3552 9085
hongkong@zetland.biz
Singapore
+65­ 6557 2071
singapore@zetland.biz
Shanghai
+86­ 21 6427 2930
shanghai@zetland.biz
London
+44 20 7229 3717
london@zetland.biz
Belize
+501­ 223 1037
belize@zetland.biz
New Zealand
+64­ 9 522 5214
newzealand@zetland.biz
Beijing
+86 10 6567 0676
beijing@zetland.biz
Contact Us
Hong Kong
+852­­ 3552 9085
hongkong@zetland.biz
Singapore
+65­ 6557 2071
singapore@zetland.biz
Shanghai
+86­ 21 6427 2930
shanghai@zetland.biz
London
+44 20 7229 3717
london@zetland.biz
Belize
+501­ 223 1037
belize@zetland.biz
New Zealand
+64­ 9 522 5214
newzealand@zetland.biz
Beijing
+86 10 6567 0676
beijing@zetland.biz

Offshore Company Formation

Zetland is able to incorporate an offshore company for its client in any jurisdiction. We specialise in administration of the company, accounting, establishing bank accounts and making transfers. Zetland can provide directors, secretaries and virtual office services.

To incorporate a company please complete the Company Order Checklist & Beneficial Owner Declaration . You may wish to contact our staff for advice and details.

To review the differences between jurisdictions, please consult our Jurisdiction Comparison Table.

Zetland works closely with HSBC and Standard Chartered Bank. To open a bank account your presence may not be necessary. Please consult our list of Recommended Banks. We are able to open bank accounts in the bank of your choice.

Our staffed offices are licensed by the corresponding authorities to provide Corporate Services.

1. Typical Uses Of Offshore Companies

2. Benefits of Offshore Companies

3. Ownership And Management Issues
4. Summary Of Offshore Jurisdictions

 

 

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Typical Uses Of Offshore Companies

Trading Companies

An offshore company may either trade on its own account or alternatively be a party to a trading transaction, i.e. receiving a commission in respect of advice and assistance.
Hong Kong is a significant centre for reinvoicing whereby goods are imported by a local or offshore company at one price and on-sold at a higher price to the end buyer.

In most cases, shipment of the goods is directly between the seller and the end buyer with the company merely acting as an intermediary handling documentation. Tax free profits may be built up in this fashion and either held for investment purposes or remitted. Often, such transactions are arranged through back-to-back letters of credit or letters of credit which are transferable from the buyer to the company and onto the seller.

Care needs to be taken in structuring such transactions and there may also be effects on the amount of import or customs duties payable in some countries because of the uplift in price taken by the reinvoicing company. Further, the costs of establishing the company and running it must be taken into account. Generally, the savings in taxation substantially outweigh any additional costs involved. Hong Kong is an ideal place to base trading companies since it is a respected jurisdiction, the “source principle” of taxation applies and communications, banking and shipping arrangements are world class.


A typical trading operation through an offshore company in Hong Kong is illustrated below:



The overseas buyer forwards the trade documents to the offshore company’s bank in Hong Kong. The offshore company then arranges for the negotiation of the documents with the supplier, who then ships the goods directly to the place instructed by the buyer. In this way surplus amounts could be accumulated in the offshore company’s bank account for investment and other purposes.

Investment Holding Companies

Offshore companies may be used to hold investments and accumulate funds free of tax. Banks in offshore centres pay interest on a gross basis and will generally maintain accounts in any of the major currencies. All offshore financial centres (including Hong Kong) do not assess tax on capital gains. Most high tax countries such as Australia, Japan and Britain do not charge non-residents with capital gains tax so that investments held by an offshore company will be exempt although dividends remitted from these countries to the offshore company will be subject to withholding tax. In situations where significant flows of dividend income are anticipated, it is often possible to mitigate the cost of withholding tax by utilising favourable tax treaties between different jurisdictions.

Intellectual Property Companies

An offshore company may be involved in purchasing rights to intellectual property such as copyrights, patents or technical know-how and sub-licensing the property. It is also desirable to place such property into an offshore entity if it is likely to become more valuable in the future. Since royalties are generally subject to withholding tax in high tax countries, some degree of planning and use of tax treaties are usually necessary.

Management Companies

Offshore companies may be good vehicles to provide management services to a company or group of companies.
The scope of services to be provided will depend on the particular business but typical activities include maintaining data servers, undertaking research and development, arranging insurance cover, placement of advertising and processing warranty claims.
The advantage of a management company is that in most cases payment for a service will not attract withholding tax.

Fund Management Companies

For suitable applicants with sufficient capital and expertise, offshore “private” or “professional” mutual fund companies may be established in a number of jurisdictions.
The vehicles are designed for high net worth individuals or sophisticated investors who have the ability to understand fairly complex financial instruments, are in a position to take on significant risk and are willing to make relatively large investments. Issues related to the various functionaries required to operate a mutual fund company as well as restrictions on marketing need to be considered carefully.

Property Owning Companies

Offshore companies are often used to hold property. Advantages include the avoidance of capital gains and inheritance taxes and the ability to change ownership of the property by transferring shares in the company rather than the property itself thus avoiding stamp duties, legal fees and publicity.

Shipping/Aircraft Owning Companies

The use of an offshore company to own or charter vessels or aircraft can lead to substantial tax savings and also lower crewing and compliance costs. Certain countries - notably Panama - have well established maritime registries and are accepted internationally by ship financiers and operators.

Insurance Companies

The establishment of a captive insurance company can result in significant savings on premiums for businesses carrying high levels of risk. Excess risk may be reinsured through the international market at wholesale rates and premiums and investments held tax free.

Personal Service Companies

Individuals who earn substantial fees such as consultants, writers, sportspeople or entertainers may arrange for an offshore company to be formed and then be paid and have a contract of employment with that company. Income may be accumulated tax free and paid out in the form of consultancy fees or salary in the most tax advantageous time and fashion for the individual.

Employment Companies

Expatriate workers on contract terms may find it adventageous to have part of salary paid into an offshore company. It is also possible to structure offshore superannuation or provident fund companies with tax or investment advantages.

Group Holding Companies

It can often be advantageous to set up a holding company in a jurisdiction with no capital gains tax and to hold shares in subsidiaries and to carry out administration and financing functions.

Banking Companies

International supervision of offshore banking has tightened up considerably to prevent criminal use of the banking system for the purposes of money laundering. Nevertheless, for suitable applicants with sufficient capital, restricted licence banks may be established in a number of jurisdictions.

For every use of an offshore company, careful thought and planning is required to ensure that objectives are being met in an efficient and cost effective manner. Zetland is in a position to assist with all such matters and to arrange the services of other professionals as required.

 

Benefits of using offshore jurisdictions for business or investment include:

Asset Protection:

Many offshore jurisdictions do not allow the enforcement of civil orders from foreign courts including those related to divorce, negligence suits and bankruptcy. In general, offshore assets may be safeguarded. Assets derived from criminal or other illegal activities, of course are a different matter and will almost always be traceable and recoverable by the authorities. Zetland does NOT countenance the use of its services for illegal purposes.

Privacy and Confidentiality:

There are strong legal privacy and confidentiality protections in most offshore jurisdictions. Most do not have double taxation agreements with other countries that would allow for the automatic interchange of information about offshore activities. Although this situation has been changing in recent years, a certain degree of privacy and confidentiality for legitimate purposes can be achieved.

Tax Savings:

Most offshore jurisdictions do not impose any type of tax on profits or income earned through corporations or trusts registered in their territory (other than annual government fees which are usually low). The use of appropriate offshore structures can possibly result in tax savings. The correct structuring of such arrangements calls for a detailed examination of the relevant facts and Zetland always encourages clients to seek advice from their local tax advisers before initiating structures.

Business:

There are often sound business reasons for establishing offshore operations. Using the offices of an intermediary, such as Zetland, allows clients to establish a local presence without the cost of acquiring staff and premises. With the use of the internet for communications and data transfer, a “local virtual office” may be set up for a client’s business at low cost.

Investments:

The offshore world abounds with a huge variety of investment opportunities that may offer higher returns than those in more regulated markets. Because of the high costs of compliance many offshore investment vehicles are not registered with, for example, the Securities and Exchange Commission in the USA and may not legally be offered to investors there. Clients must always seek professional assistance from licensed advisers regarding investments.

Zetland will only deal with clients on the basis that a corporation or trust is established. Personal accounts are not handled on a fiduciary basis. In addition, there must be full disclosure of all relevant facts including the identity of beneficial owners of any structure set up or administered by us.

Such information is, of course, kept completely confidential. Zetland operates on the “know your client” principle and the fact that we undertake such due diligence in turn engenders the trust of other professionals such as bankers and lawyers and also government regulatory agencies in many countries around the world. Zetland is also happy to take over administration of structures set up with other professional firms provided our due diligence procedures are met.

 

Ownership And Management Issues

Using an offshore company can provide many advantages. As always, proper tax and legal advice should be taken in one’s country of citizenship and residence before the commencement of offshore business.
Zetland always considers carefully the circumstances of each client and their business objectives and goals in order to tailor offshore arrangements to their requirements.

It should be emphasised that establishing a company offshore is a serious matter that should not be undertaken without careful consideration of the factors involved. The initial and annual costs should be considered and compared to the value that the company will have in the future. In addition, every use of an offshore company depends upon there being real commercial substance behind the entity. In particular:

-The company is properly constituted with directors in place.

-The company holds regular meetings of directors and members as laid down in the appropriate legislation and its articles of association.

-Any transactions conducted are real.

-Proper books of account and records are kept.

-Pricing and commercial transactions follow a reasonable “arms-length” basis and are approximately equivalent to third party relationships.

-Typical uses of offshore companies are as follows:

In order for an offshore company to be effective, it is usually necessary for it to be seen to be operating at arm’s length from and often independently of the beneficial owner. The beneficial owner must therefore consider the following matters carefully.

Who should know about the company? Family members, professional advisers, employees and friends may or may not be appropriate people to inform.

How are communications to be effected with the company administrator? Inevitably there will be written correspondence to be received as well as faxes and emails. The owner should decide how material is to be handled (especially during periods of absence such as holidays or business trips) and clearly inform the company administrator.

Are there to be multiple shareholders in the company? If a company is to have more than one non related shareholder, it is usually desirable to have a shareholders’ agreement specifying how the company is to be run commercially including how shares are to be disposed of as these matters are never addressed in great detail in the company’s articles of association. Zetland can assist in this regard.

How are shares to be held? This is an important consideration for estate planning. If shares are held by an individual, then upon death there could be adverse tax consequences in many countries. The use of a trust arrangement for holding shares may avoid this, but each domicile has different rules and considerations.
Does the shareholder need to be disclosed publicly? In some jurisdictions, shareholding is a matter of public record. Often the need to disclose a shareholder can be avoided by entering into a trust arrangement with a nominee who acts as shareholder of record but not the beneficial owner. Under such arrangements, the beneficial owner should have the power to take control immediately of the company. Alternatively, an option arrangement can be used.

Who should be the directors of the company? In general, the activities of an offshore company are conducted through directors. In many offshore jurisdictions, the identities of directors are not publicly disclosed. However, many acts of the company will require a signature by directors so that their identities will in time become known. An alternative is to appoint nominee directors to act on the wishes of the beneficial owner. Appropriate safeguards can be put in place.

Who should control bank accounts in an offshore company? Since bank or brokerage accounts are in the name of the company, any individual may be named as a signatory. The beneficial owner must weigh security and control issues with the need to have efficient practical arrangements.

What are the duties and responsibilities of the company administrator? These can range from very limited services to wide ranging control over the company. A company administration agreement clearly setting out the obligations of each party is recommended.

Summary Of Offshore Jurisdictions

Zetland maintains information on the current regulations in most of the offshore centres and has links with reputable and reliable agents throughout the world. In most cases, companies incorporated in an offshore jurisdiction may be administered from Hong Kong, usually by having nominee directors resident in Hong Kong. However, some jurisdictions such as Bermuda require resident directors in addition to non-residents. Bank accounts may also be opened in Hong Kong or elsewhere on behalf of non-resident companies under Zetland administration.
In recent years, competition between offshore jurisdictions has become more intense. We provide a summary of the key features of some popular domiciles on request for Zetland’s Information Sheets.

Details of other exotic hybrids such as Limited Liability or No Share Capital companies are available on request.

Zetland maintains stocks of Hong Kong, BVI, Belize, St. Lucia, Seychelles and Mauritius shelf companies that may be activated immediately by clients.

Pacific Area

In the Pacific Area, Hong Kong is the leading jurisdiction. The Malaysian Government has established Labuan as a low-tax offshore base and this is becoming an attractive option although it is rather cumbersome to use. The Cook Islands and Samoa have generally good legislation in place. The Cook Islands is a leading asset protection trust jurisdiction. Singapore companies can be useful because of the tax treaty network there.

Indian Ocean

Mauritius and Seychelles are the leading jurisdictions. Each has a network of double tax treaties (including China) that can be accessed when setting up offshore structures.

Caribbean

The most popular jurisdiction remains the British Virgin Islands where the companies can be established quickly and there is relatively little compliance required. The Cayman Islands and Bermuda also remain popular, particularly for banks or financial institutions and many of Hong Kong’s larger companies are domiciled in Bermuda. Anguilla and St. Lucia are making efforts to capture more offshore business and have become attractive jurisdictions. Belize also offers a user friendly, relatively inexpensive corporate structure and has some innovative trust legislation.

Europe

The British offshore jurisdictions of Isle of Man, Channel Islands and Gibraltar remain popular although costs can be high and regulation and compliance is increasingly burdensome. The jurisdictions of Ireland and Luxembourg tend to be among the tax saving jurisdictions.

 

 

 

 

 

 

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