Traditional tax haven companies for offshore businesses for international business
- A tax haven jurisdiction characterizes the following i) zero corporate tax and personal tax ii) lack of transparency re shareholders and directors iii) no requirement for a local presence and iv) no annual accounting and tax reporting;
- It is no longer fashionable to conduct international business through these offshore tax haven business entities. The stigma associated with traditional tax haven entities is pungent. Consequently, the use of corporate tax havens is limited to being a holding company for international shares, or for offshore asset protection;
- For tax haven entities, it is becoming more difficult to open offshore corporate bank accounts and brokerage accounts. Banks and financial institutions class tax haven entities as high risk customers;
- Customers, suppliers, and governments are becoming uncomfortable conducting business with tax haven business entities. There is and will continue to be too much negative press about using these types of companies;
- Healy Consultants believes that within 10 years, some tax havens will contain public registers of shareholders and directors. This change will enhance the transparency of these companies and hence their reputation. In summary, tax haven business in their current form are not long term solutions. Cooperation between governments (e.g. UK, US, EU) and tax havens (e.g. Isle of Man, Guernsey, Jersey, Switzerland) is leading to more jurisdictions implementing the international standards of transparency and exchange of financial related information. Starting in 2017, many offshore jurisdictions will begin participating in automatic exchanges of information with OECD countries;
- Tax exempt jurisdictions enjoying a positive international trading image for offshore business entities include Singapore, Hong Kong, Dubai and Luxembourg;
- Some of Healy Consultants’ preferred jurisdictions for setting up offshore companies include Dubai, Marshall Islands, Labuan, and Brunei.