Top 6 Best Offshore Jurisdictions For Foreigners In 2023

Following our discussion on the roadmap to your offshore business venture, it is time for you to decide where to incorporate your business.

The choice can be complicated as there are various factors to be taken into consideration. Each offshore jurisdiction carries its own set of advantages, benefits, and possible issues.

While it is very difficult to get a definite answer, we’ve summarized a list of popular offshore locations as well as some recommended options that are worth looking into!

Tips on choosing the best offshore jurisdictions

There are many things that you need to consider before determining the best place for your offshore company. Below are some recommended questions for self-check:

• Reason to incorporate: What are your expected benefits? Does the offshore location meet your needs? How to form the best offshore in the world?
• Jurisdiction reputation: Does that offshore location have a stable economy, politics, legislative system, and corporate laws? Is it included in the “blacklist” or “grey list” by EU Council?
• Taxation: Are there any special taxes or exempted status imposed on offshore companies? Under what circumstances may your company be liable to tax?
• Entity structure: How many structures are available? Are you allowed to incorporate your structure of choice (e.g. IBC, LLC, Pte, or Ltd) in that jurisdiction?
• Incorporation cost: How much is the incorporation cost? Which countries offer the lowest incorporation cost?
• Compliance requirements: What are reporting requirements for your company if it operates within that offshore jurisdiction?
• Merchant banking: Do you need a corporate bank account to run your business in that jurisdiction? What are the options of local and international banks available there? Does the country’s banking system allow the opening of offshore debit or credit cards, merchant accounts, or cryptocurrency accounts?
• Processing time, residency situation, and the availability of tax treaties: How long does it take to incorporate your company in that offshore jurisdiction? Are there any residency requirements for your company directors, shareholders, or company secretary when moving offshore? Does that offshore country have any signed double taxation agreements or tax treaties that can be applicable to your corporation?

So which are the top options for the best countries to set up an offshore company, the latter will introduce you to the definition and some of the most popular suggestions.

Types of offshore jurisdictions compared by tax incentives and other perks

One of the top priorities for many owners when looking for the best country to set upon the offshore company is to optimize their profit through tax incentives. So, in order to take up the full opportunity, one should know how offshore jurisdictions are categorized in terms of incentives.

The first term you should encounter is the classic offshore or the zero-tax offshore. These jurisdictions bring to owners a tempting offer, a full package of tax exemption for any business operations that happen outside the border of that nation with only an annual fee that needs to be paid.

The second type of offshore entity also brings a lot to the profit optimization system of one business. With suitable regulation and implementation, these countries can offer non-resident businesses a low-tax advantage.

Furthermore, in countries with zero tax, the state does not benefit from the taxes replenished from the non-resident businesses, it is the charge of registration and the annual fee that matters to the nation. Therefore, if one country is able to implement this scheme, it will fall under this jurisdiction.

As specified, the favorable regime of one classic offshore includes a pay-no-corporate-tax offer, the privacy of the beneficiary owners, and the free-duty form for submitting the financial statements. However, foreign businesses need to make a mental note that these jurisdictions do not sign the DTTs, so there are possible your income will be taxed double.

List of best-recommended entity types for offshore countries

For other offshore countries’ entity suggestions, you can check out our tool Offshore company comparison

Examples of best offshore jurisdictions for foreigners

Below are some common offshore jurisdictions for foreigners to incorporate their company, along with each place’s most recommended entity structure:

Hong Kong

Hong Kong is top-listed as an ideal country for offshore company formation for its strong international reputation and beneficial business schemes, including:

• 100% of foreigner’s ownership
• Business-friendly tax regime: Free corporate tax for foreign-sourced profits, low tax rate from 8.25% to 16.5%
• Free sales tax, capital gain tax, dividends, and interest tax
• No exchange controls
• Open trade policy, competitive economy, the independent legal system
• Financial hub with 75 out of the 100 largest banks in the world
• Ease of access and entry point to mainland China

Among many choices, a Limited Company is the most common type of entity in Hong Kong. It is popular among start-ups, entrepreneurs, and those looking for international trading businesses.

Below are some advantages and disadvantages of Hong Kong Co., Ltd that might be worth your consideration:

Advantages

• Shareholder’s liability is limited to the number of shares
• Any change in the company’s shareholders does not impact the existence of the company
• The company can enter contracts, acquire assets, sue or be sued under its own name
• Transfer of ownership can be done wholly or partially by selling or releasing the shares

Disadvantages

• The company needs to fulfill compliance requirements on an annual basis with CR and IRD
• The identity information of shareholders and directors must be disclosed to the public
• Maintenance and dissolution for Hong Kong limited company are quite complicated

Singapore

Singapore is another fast-growing commercial center in Asia, also known as the promised land for start-ups, entrepreneurs as well as investors in respect of commodity trading and wealth management. Some key highlights of Singapore’s business nature include:

• Transparent tax scheme: Only businesses conducted in Singapore are taxed; the corporate income tax is capped at a competitive rate of 17%
• More than 70 tax treaties available between Singapore and foreign jurisdictions
• Partial tax exemption schemes and various incentives for startups and investors, especially in fintech and technological innovation industries
• One of the world’s top-notch banking systems
• High-skilled workforce, beneficial visa schemes for foreigners

A private limited company is the most popular option to incorporate in the city-state. Either individuals or body corporate can be shareholders of a Singapore private limited company.

Below are some advantages and disadvantages associated with this type of entity:

Advantages

• Shareholder’s liability is limited only to their shares and they are not personally liable for the business’s debts
• The company can own property, enter contracts under its own name
• Any change of members does not impact the existence of the company
• The ownership can be transferred completely or partly by transferring to another
• The company can enjoy many tax schemes for tax reduction

Disadvantages

• Follow annual compliance requirements with ACRA and IRAS
• Maintain accounting and other relevant documents

British Virgin Islands (BVI)

British Virgin Islands is a well-known tax haven and financial offshore jurisdiction. The reasons behind the attractiveness of the BVI may be its ease of setting up a company and its cost-effectiveness.

In addition, there are some other pull factors that make the BVI become one of the top pick offshore jurisdictions:

• Tax exemption for profits derived outside of the BVI
• Ease of doing business and banking
• USD as an official currency
• No currency exchange control
• No annual meeting requirements
• No financial statements, annual return requirements

BVI Business Company (BVI BC) is among the most popular vehicle for foreigners seeking offshore investments, international trade, savings, corporate banking, estate planning, and other purposes. A BVI BC can enjoy favorable tax benefits and reduced compliance requirements under the islands’ business-friendly offshore environment.

Unlike Hong Kong and Singapore, where the publicity of identity information is a key requirement, offshore countries like the BVI are highly confidential. The details of the BVI BC’s beneficial owner, directors, and shareholders are only disclosed to the competent authority (the Registrar) and the Registered Agent but are not publicly available.

Cayman Islands

The Cayman Islands is another well-recognized offshore incorporation jurisdiction.

The BVI and Cayman Islands share many common features. Both are leading offshore financial hubs for international business services, linked with economic and political soundness, the simple incorporation process, and a set of tax-related advantages for investors and offshore players.

The key comparison may lie in its incorporation cost. Cayman company formation tends to charge you a higher price than the BVI.

One widely-selected offshore business type in the Cayman Islands is a Limited Liability Company (LLC).

A Cayman LLC does not pay local corporate tax for any earnings generated outside of its jurisdiction. There are no direct taxes, no exchange control, and minimal reporting requirements for LLCs.

Cayman LLC is also an ideal option for business seekers of asset protection, investment funds, private equity transactions, securitizations, movable or immovable asset holdings, etc.

Belize

Belize is a golden site for overseas businesses, high-net-worth individuals, as well as international investors to move offshore.

Belize offers a relatively competitive cost of formation, a swift incorporation process, and a set of preferable privacy policies and tax benefits for non-residents.

What are Belize’s exclusive attractions to entrepreneurs?

As an offshore jurisdiction, Belize provides:

• A straightforward incorporation process
• A secure, democratic, and stable judiciary system
• High level of confidentiality and privacy in terms of records of directors and shareholders regarding account-related information
• A primary banking sector that supports businesses with a high liquidity ratio, remote bank account opening service, and low deposit requirements
• It is among the top highest per capita income in Central America
• The official currency is Belize Dollar (BZD) but US dollars are gladly accepted throughout the country

One of the most common business structures for foreign entrepreneurs looking to set up a business in Belize is the International Business Company (IBC). Additionally, Belize is also among the fastest IBC Registry.

Recently, following the new Belize Companies Act 2022, Belize International Business Companies (IBCs) are being recognized as Belize companies, starting November 28th, 2022. IBCs or local companies no longer exist as they both share a single legal status of “Belize companies” with the same rights and obligations.

If this jurisdiction is still on your priority list, forming an LLC can be a sounding alternative since LLCs remain excluded from being the subject under the ES rule.

RAK

Ras Al Khaimah, or RAK in short, is one of the seven fastest-growing emirates of the United Arab Emirates. RAK has the highest degree of industrialization in the UAE, and it is the prospective destination for a large number of foreign investors and business owners.

RAK company formation is now high in demand since it allows you to carry out almost all types of business activities, especially for holding companies, consultancy, financial service companies, investment, or international trading.

An International Business Company is a highly-recommended type of business to incorporate in RAK for the following reasons:

• 100% ownership of foreigner
• Tax neutrality in respect of foreign-sourced earnings
• No obligation for a specific currency used as the company’s capital
• No limit on bank transfers and deposits for share capital
• Guaranteed confidentiality regarding the register of company members
• No annual reporting or accounting requirements
• Fast incorporation in 1 or 2 working days

Best offshore company country for tax reduction

Panama

Despite the crisis, Panama, made famous by the Panama Papers leak, is still a suitable option for the establishment of an offshore business. Contrary to what the media portrays, it isn’t just used to conceal unlawful assets.

Panama provides many favorable policies for attracting foreign businesses. Plus, the judication allows corporations to be established by a single director who can be a citizen of any nation and is not subject to local corporation taxation, audit requirements, or financial account preparation.

Cayman Islands

One of the most well-liked choices for offshore hedge funds and offshore businesses is the Cayman Islands. The 0% business tax rate is the major justification. There are no withholding taxes, capital gains taxes, profit taxes, income taxes, or any similar taxes.

In addition, its offshore business renewal and registration costs are cheaper than those in other nations. The OECD and the International Financial Action Task Force both have the nation on their white lists. In contrast to other tax havens, it complies with international tax legislation.

This island is also the home of many hedge funds, making it more appealing to businesses all around the world.

Cyprus

Cyprus is a great place to establish an offshore business if you intend to join Europe because of its membership in the EU. It has been a member since 2004 and, as of 2008, it has also been a member of the Eurozone.

You will receive an Intra-Community VAT number when you establish a business here. Companies must comply with this regulatory requirement to conduct business with other EU nations.

You are also not overly constrained because the organizational structure of the business is flexible. Additionally, there are no minimum capital restrictions, in contrast to other EU nations.

Despite not being as widely known as other Caribbean tax haven nations, it boasts one of the lowest tax rates. Cyprus, specifically, has one of the lowest tax rates in the EU at 12.5%.

Cyprus’s exclusion from the Automatic Exchange of Information is another perk for investors in this nation (AEOI). This implies that you are not required to provide your bank account information while opening an offshore bank account here.

Where are the best countries to set up an offshore company?

Find the country that will suit your needs and work best for your company! It is also crucial to invest your time to understand your choice, consider relevant factors (the jurisdiction’s reputation, trustworthiness, tax policies, compliance requirements, et cetera), and then narrow down the list to reach the best-suited option.

To save time and resources, you can also engage the best offshore company formation service provider to get practical advice on your specific needs and circumstances. BBCIncorp has more than 12 years of experience in offshore incorporation services. Our expert team has worked through thousands of cases with our clients across the globe. We aim at simple, fast, and transparent services for our clients in setting up their companies overseas!