What are the 5 Most Common Types of Offshore Company for Foreigners?
Yes, an offshore company formation is the answer for businesses that are planning to “go global.” But first, I must share with you the simple way to explain what an offshore company is. For example, you live in Dubai, you setup a company in British Virgin Islands (BVI), that’s it you got yourself an offshore company in BVI.
Going global with an offshore company formation is not merely about expanding your business internationally, but you will gain access to wide options of countries with profitable business environment that can be beneficial to your growth. As governments around the world put vast effort to build various offshore investment opportunities for entrepreneurs, it is without a doubt a step that you must take to thrive internationally.
So, given all these appealing reasons why you must adopt offshore company formation, one vital question that occurs to mind is “Which type of offshore structure should I go for?” Accordingly, in this article we will discuss the 5 most common types of offshore company that most foreigners choose to give you an idea on which one is suited for you.
International Business Company (IBC) or Business Company (BC)
An International Business Company (IBC) or Business Company (BC) depends on the rules of the specific offshore jurisdiction. For instance, in the Seychelles, an offshore company is known as an IBC, while in the BVI it is known as a BC.
These types of companies can engage in normal business activities given they are conducted outside the jurisdiction in which they are incorporated. Otherwise, you will not be able to enjoy special tax benefits.
Some advantages of this type are as follows:
Tax Exemption
Any business conducted out of the local market is not subject to stamp duty or other local corporate tax regulations.
Cross-Currency Account
You can keep your IBC accounts in almost all currencies. And so, you will not lose your wealth integrity value or expose it to the global market’s major currency changes.
Confidentiality
IBCs, for instance in Seychelles, avoids having to keep track of its basic business expenses and can be able to keep their profits hidden.
International Company (IC)
An International Corporation (IC) and an International Business Corporation (IBC) are both similar (IBC). Some offshore jurisdictions such as RAK IC offshore company, have close ties with this form of company.
Some advantages of this type are as follows:
Tax Exemption
ICs are not eligible to pay any tax. For instance, a RAK IC offshore company is not liable to pay any form of tax such as corporate tax, withholding tax, income tax or import-export tax.
Confidentiality
The names of the shareholders and directors are kept hidden from the public.
No Minimum Capital
Minimum capital amount is not needed though for RAK the authorized share capital is $1 USD.
International Limited Liability Company (LLC)
An offshore Limited Liability Company (LLC) is an incorporation. This type of company has the components of both a partnership and a corporation. In addition, the owner has limited liability. Some of the most common jurisdictions that offers this type are Belize, Seychelles, and Panama.
Some advantages of this type are as follows:
Tax Exemption
An LLC allows a numerous level of tax exemptions. Below is the list of the following taxes, which may vary on the regulations of each country:
- Income tax
- Business tax
- Asset tax
- Gift tax
- Capital gains tax
- Distributions tax
- Inheritance tax
- Estate duty
- Estate duty on assets
- Withholding tax
Confidentiality
The identities of the shareholders and directors are kept privately, such as in Belize LLC.
Asset Protection
Since your account is in a foreign country, your ability to access the company’s assets are limited which may protect you from legal actions.
Private Limited Company (Pte Ltd)
A Private Limited Company (Pte Ltd) is a legal entity whose members are solely responsible for the debts and other financial obligations applicable to the company’s ownership obligations. Additionally, this form of business has limitations on owner liability and public trading of shares.
Some advantages of this type are as follows:
Asset Protection
The shareholders’ financial liability is limited, so if the private limited company runs into financial difficulties and has to dissolve, the shareholders do not risk losing their personal assets.
No Minimum Capital
Minimum capital amount is not required except for at least one share at the time of formation.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a hybrid of a limited company and a simple partnership. Often, these are experts in high-risk areas of work and are looking for more comprehensible options that cover limited liability, organizational flexibility, and tax transparency.
Some advantages of this type are as follows:
Simple Annual Compliance
Appointing a company secretary, holding annual general meetings, and complying with some filing obligations, such as filing tax reports are not needed.
Asset Protection
LLP has its own legal business structure, and so members’ assets are protected from business liabilities.
Various Business Activities
This type of business can do a range of activities, including owning, renting, or leasing property aside from hiring staff.
Unlimited Partners
As simple as it means, there’s limit in the number of partners in an LLP as long as you meet all the requirements to become one.
Conclusion
Offshore company formation entails taking the correct measures to ensure that your business is properly set up. If you already have a destination in mind, Skwer Group can support and guide you throughout the whole company formation process. So, as an option, one of the popular jurisdiction with minimal paperwork, fast incorporation process and with cheapest offshore company formation can be found in UAE. For more info on our offshore company formation services and other related business setup services, you may reach us at info@skwergroup.com or chat with our team experts for a faster response.
