The Most Popular Mid-Shore Jurisdictions
Unlike classic offshore jurisdictions, mid-shore jurisdictions adhere to all international standards on tax transparency while also offering a favorable, more interchangeable tax rate. Regulatory pressure continues to grow on offshore jurisdictions, which can make mid-shore jurisdictions a better option. Experts predict that mid-shore jurisdictions could very well surpass offshore jurisdictions in terms of popularity. So, what are the most popular mid-shore jurisdictions? And what should you know about each? Let’s take a look.
Singapore: As an advanced country with relatively low taxes, a competitive business environment, and a high standard of living, Singapore is a popular mid-shore jurisdiction. Income generated outside the country is not typically subject to local taxation. Neither a company’s register of shareholders nor register of executives is publicly accessible, affording an advantageous layer of privacy.
Hong Kong: Hong Kong offers tax transparency, a strong legal system, and favorable tax rates. All companies established in Hong Kong are treated equally, and all are subject to the local minimum tax. In other words, there is not a distinction between resident and nonresident companies. The advantage is that revenue generated by business activities outside of Hong Kong is not subject to income tax. Keep in mind that all accounts must be verified by an appointed auditor and sent to the tax office, and an annual report is required. Furthermore, a company’s register of shareholders and register of executives is publicly accessible.
Cyprus: Cyprus is situated as an international financial center thanks to an expansive network of double taxation avoidance agreements. Cyprus boasts one of the lowest tax rates in the European Union and also has created advantageous conditions for tax optimization of international transactions. Furthermore, neither a company’s register of shareholders nor register of executives is publicly accessible. However, keep in mind that Cyprus does require the submission of financial statements and annual reports, and it mandates audits of a company’s foreign income tax.
Malta: Malta boasts a highly stable legal environment, a number of double taxation avoidance agreements, low taxes, and favorable copyright license fees. However, a company’s register of shareholders and register of executives are publicly accessible.
The bottom line is that mid-shore jurisdictions are becoming increasingly popular options. Between 2009 and 2012, the portion of European wealth managed in Hong Kong and Singapore increased by 1 percent annually, comprising between 8 percent and 9 percent of the total. The two countries have also been attracting capital from Southeast Asia, notably Indonesia, as well as China and India. If growth rates continue, it is estimated that Singapore and Hong Kong combined could overtake Switzerland. Mid-shore jurisdictions will only become more popular options.
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