Offshore companies: Aspects of selection: (Part II.)
Choosing the most appropriate location to execute international commercial activities or make investments is often a difficult task requiring well-founded considerations. In most offshore financial centres, there is no foreign currency limit, and company legislation of these locations is in line with international business requirements. It is important to choose a location of operation which meets your requirements and those of your offshore company the most.
Using the most modern communication channels available is a key issue for an area of operation. The accessibility of a location by air and the availability of telecommunication and courier services are essential to have a quick and smooth course of business.
Offshore banking services
Although the offshore companies registered at the locations ensuring favourable conditions can use offshore banking services anywhere in the world, most clients prefer to open a bank account in the country where their company is registered. In such cases, it is important to have a full scope of banking services which are well integrated into the international banking system.
Treaties aimed at avoiding double taxation
Areas of operation can be divided as follows:
- Locations which have treaties aimed at avoiding double taxation in force
- Locations which do not have treaties aimed at avoiding double taxation in force
Clients who wish to leverage the advantages of treaties aimed at avoiding double taxation must register an offshore company at a place of operation where the treaties aimed at avoiding double taxation are in effect. This is of fundamental importance in order to avoid the deduction of the withholding tax emerging from the payment of dividends, royalties and interests in the member states affected by the given treaty. Countries with treaties to avoid double taxation have a higher reputation; therefore, they are more attractive.
Companies are usually established in countries without treaties aimed at avoiding double taxation because there is no obligation to pay corporate taxes in such countries, and the companies are only due to pay a flat rate annual fee. Consequently, it is important to assess the taxation aspects in relation to the planned business activities and decide which place of operation is worth undertaking. In general, it is not necessary to choose an offshore location for the international commerce of goods and most services which have treaties aimed at avoiding double taxation in place. In the cases of investments made in certain countries however, it is justified to choose a location which has treaties in force that minimise the obligation for paying taxes.
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