| |
 |
| International
Trade |
| The movement of
goods across international borders offers many opportunities
for the use of offshore companies. Offshore companies
are often interposed in between buying company and selling
company to |
| 1. |
Keep the buyer
and seller's identity confidential |
| 2. |
Centralize
procurements to reach scale of economics |
| 3. |
Accumulate
profits in tax favorable jurisdictions |
| 4. |
Act as commission
agencies |
|
| The recently developed
ecommerce often conduct their trading business or consultancy
services to overseas contractors or foreign clients via
offshore companies. |
| Financial
Holding and Investment Activities |
| Offshore companies
are often used for variety of corporate financing and
investment activities, some of which are indicted in the
followings: |
| 1. |
To invest
into foreign based subsidiary or associated companies, |
| 2. |
To mix profits
and losses from subsidiaries to lower the effective
tax rates |
| 3. |
To
obtain financing from institutions that are themselves
free of high taxation and therefore lower the financing
costs |
| 4. |
To hold foreign
real estate, |
| 5. |
To hold equities
or bonds quoted on overseas or domestic stock exchanges |
|
| Taxations on capital
gains arise from the disposal of particular investments
or on dividends payments or on interests received may
be reduced or even be exempted through the use of an offshore
company incorporated in a low or zero tax jurisdictions |
| IPO
Planning |
| Offshore companies
are often used by companies who plan to go IPO overseas.
For example, companies wish to be listed on the Hong Kong
Stock Exchange must be incorporated either in Hong Kong,
Cayman Islands, Bermuda or P. R. China. Different rules
and requirements apply for Chinese companies. Proper structure
is essential to the success of IPO. |
| Special
Projects |
| Offshore companies
are often used to establish separate legal entities to
hold projects, to form joint ventures, or to use offshore
funds to invest domestically. A separate legal entity
can effectively minimize risk exposure and insert layer
of protection to the established business. |
| Licensing |
| Intellectual property
such as patents, copyrights, designs, computer software,
and technical know-how may be owned by an offshore company.
The rights can be licensed to companies around the world
and the royalty payments can be accumulated offshore.
International franchises can be similarly structured through
an offshore company. |
| Utilising
Double Taxation Treaties |
| Offshore companies
are often used by companies wishing to conduct business
in a country where there is no double taxation treaty
with their home country. An intermediary offshore holding
company in a jurisdiction where there is a suitable treaty
enables those companies to benefit from double tax treaties
and add more flexibilities as to where the company wishes
to re-invest its foreign source income and when to remit
foreign earned profits back to there home country where
tax credits will be given. |
| Professional
Services |
| Professionals and
professional firms to offer their services internationally
often use offshore companies to reduce their tax liabilities. |
| Employment
Vehicle |
| Multinationals often
use offshore company as a vehicle to hire overseas employees
and to reduce their tax liabilities. |
| Offshore
Banking |
| Bank accounts can
often be opened under the name of offshore company either
onshore or offshore which enable the company to deal with
foreign currencies with more flexibility. |
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