In some jurisdictions, the tax system offers significant advantages to foreigners. This is why many entrepreneurs choose to establish an offshore company to benefit from a different tax framework.
Before starting the incorporation process, it is essential to fully understand how an offshore company works and its connection to tax optimization.
What is an offshore company?
An offshore company, also known as an extraterritorial or non-resident company, is an entity established in a country where it is not permitted to conduct local business activities.
It is often created to benefit from a more favorable tax framework. In Dubai, in particular, there is no corporate income tax or wealth tax.
What are the advantages of an offshore company?
Tax benefits
Some offshore jurisdictions offer reduced taxation, or even no tax on certain taxes, allowing the company to reduce its tax burden.
Privacy
Privacy is high when you own an offshore company. However, it is important to bear in mind that, for several years now, tax havens have been encouraged to show greater transparency.
Easier creation
In many offshore jurisdictions, the incorporation process is quick and relatively simple.
Low operating cost
Low operating costs are also an advantage compared with certain onshore companies.
Launching an offshore company: is it legal?
A structure that can be perfectly legal
It is legal to establish an offshore company as long as the rules and obligations of the country of residence are complied with.
Tax optimization ≠ tax fraud
Legal tax optimization must be distinguished from tax evasion or tax fraud. An offshore company must be structured transparently and in compliance with the applicable rules.
What steps are necessary to launch your offshore company?
Choose a Corporate Service Provider
It is recommended to consult a professional to learn about the procedures specific to the chosen jurisdiction and ensure secure registration.
Register the company
The procedure depends on the country and type of company. Support is a way to simplify the formalities.
Open the bank account
Opening an account is a crucial step. The rules are strict and may vary from one bank to another.
How to open an offshore bank account?
When you launch your offshore company, you will also need to consider opening a bank account.
The rules for opening an offshore account are strict and vary depending on the country and the banking institution. In Dubai, the procedures became more complex starting in 2017.
It is therefore recommended to seek assistance from a Corporate Service Provider to identify a suitable bank, in the United Arab Emirates or elsewhere.
How much does it cost to set up an offshore company?
The cost of setting up an offshore company is not very high. However, it is important to define your budget for both setting up and managing the company to avoid unpleasant surprises.
A Corporate Service Provider may offer an all-inclusive package for setting up and managing the offshore company.