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There was a general perception that multinationals route investment or ownership holding and investment by IOFCs (International Offshore Financial Centres) due to low computer technology or lack of modern telecommunications in the old days.
The evolution of modern telecommunications and evolution of financial infrastructure of some IOFCs had changed the offshore climate allowing many SMEs or new biz businesses to enjoy tax advantages. For example, there are around 500 banks there to reduce their own tax bills and to service the needs of corporations that want to lower their tax burdens. A very wide variety of corporate financing and investment purposes offshore listed below:
1. to consolidate the profits and losses from subsidiaries in one or two low-tax location, which is/are more tax-efficient than remitting them to the high-tax base country. 2. to obtain financingfrom institutions that are themselves free of high taxation (especially withholding tax) than they can from high-tax centres. Project finance is often approved offshore, where the burden of regulation is lighter. 3. to hold foreign subsidiariesand receive dividends or interest on loans from them in a tax-efficient manner; either because there is a good tax treaty between the IOFC and the foreign country concerned; or because the IOFC itself has low taxes; or a combination of the two. 4. to base in-house treasury and finance departments in a flexible, low-tax environment from which they can provide the best and cheapest service to group companies wherever they may be.
Double Tax Treaties and Transfer Pricing. It may often be the case that a corporation resident in a particular high-tax country will choose a specific IOFC. Although traditionally not many low-tax jurisdictions have had Double Tax Treaties with high-tax countries, this situation is gradually changing. One major consideration is transfer pricing and thin capitalization rules: whereas ten or twenty years ago corporations were comparatively free to make profits where they chose to place them. Where for instance a high-tax country has a black-list or grey-list of countries with 'preferential' regimes, and may apply punitive rates of withholding tax and in this case the use of a low-tax jurisdiction may even be a disadvantage. For Double Tax Treaties among countries and black or grey list of low-tax jurisdictions, please contact info@intershores.hk
In choosing an IOFC for financial purposes, it is the finance sector infrastructure that is most important, and here is a list of IOFCs qualify as below:
British Virgin Islands
If you want to know more, please do not hesitate to contact us:
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.
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