Top Reasons To Set Up Offshore Business In 2021

reasons set up offshore business taiwan company tax shelter

Offshore company formation brings about a plethora of benefits for businesses, which includes tax advantages, asset protection and international business opportunities. With each country offering different advantages, it is crucial to select a country which best meets your long term goals and business needs. Ranked 15th in the World’s Bank Doing Business 2020, starting a business in Taiwan is one of the top choices among individuals due to its easy incorporation processes. Regardless whether you are an aspiring entrepreneur or an experienced business owner, we will provide you with the top reasons to set up an offshore business in 2021. 

What Is An Offshore Company? 

An offshore company is a company incorporated in a jurisdiction outside of the country where the beneficial owner of the company. Simply put, an offshore company is incorporated overseas in a foreign jurisdiction. 

Offshore companies are often called International Business Companies or (IBCs). Offshore companies are corporate entities that trades, holds assets and conduct business activities outside the jurisdiction the company is incorporated. As offshore companies are owned and exist as non-resident entities, financial transactions of offshore companies are made outside of the jurisdiction the company is incorporated in and hence they are not liable to local taxation. Moreover, offshore companies are also separate legal entities from its owners or directors. By separating the company from the owners, the owners are not liable for the company’s debts or liabilities. 

Some of the popular jurisdictions for offshore company formation include Belize, Cayman Islands, Cyprus and Singapore. 

Reasons To Set Up Offshore Businesses 

More often than not, setting up offshore companies allow businesses to take advantage of the flexible regulations which cannot be found in their home country. While there are numerous reasons to set up offshore businesses, the distinct characteristics of offshore businesses include asset protection, privacy and tax reduction. 

Among the numerous efforts made by governments to attract foreign companies to set up offshore businesses, it includes corporate laws that simplify regulations to lower the bureaucratic red tape and offering special taxation status to non-resident companies. Depending on tax obligations of different jurisdictions, companies may not be liable for domestic taxation or they do not need to pay taxes on capital gains and worldwide income. For those looking to lower their tax burden in tax havens, offshore companies are generally exempt from taxes or pay a minimal amount of tax in the country of incorporation. As a result of such efforts, many businesses choose to set up offshore businesses so that they can move from a jurisdiction with high taxes and regulations and to a jurisdiction where they can take advantage of local corporate laws and liberal regulations. 

Another reason foreign companies use offshore companies is that it offers them a high level of privacy and confidentiality. Offshore companies allow individuals and businesses to separate their assets from liabilities. As offshore companies are separate entities, you can carry out financial and business transactions through the name of your business instead of your name, thereby offering privacy to business owners. Moreover, company registers in certain offshore financial centres do not disclose details of the company on public records, thereby providing confidentiality for directors and shareholders. This is beneficial for individuals or companies that wish to keep their identity private and remain anonymous. Another way to ensure confidentiality is the use of nominee directors, shareholders and secretaries. 

Additionally, asset protection provides another reason for setting up offshore companies. With the separation of the company assets from you as an individual, it allows you to protect your assets from anyone who wishes to seize your assets, such as creditors. 

Types Of Companies In Taiwan 

Taiwan offers different types of business entities for you to choose from, where each business entity caters to different types of business activities. Foreign companies that wish to operate business in Taiwan can choose between these 5 business entities. This includes Limited Liability Company (LLC), Limited Partnership, Free Trade Zone company, representative offices and branch offices. There are 7 Taiwan Free Trade Zones located in the Port of Kaohsiung, Port of Taichung, Taoyuan International Airport, Port of Taipei, Port of Anping, Port of Keelung and lastly the Port of Suao. 

Prior to Taiwan business registration, it is crucial to fully understand your business model before choosing the most suitable business entity. Some considerations you should take into account include the type of business activity, tax obligations as well as potential personal liability. 

Why Set Up An Offshore Business In Taiwan? 

Setting up an offshore business in Taiwan provides numerous advantages for individuals looking to set up an offshore business. As Taiwan boasts a reputation of being an ideal business platform in connecting China and Southeast Asian countries, this has attracted many companies to set up their businesses in Taiwan. Taiwan is welcoming to foreign direct investments and provides a business friendly environment for foreigners, thereby facilitating the integration of international investors to Taiwan’s thriving economy. Taiwan’s investment-friendly environment is justified through the nation’s ranking on the Foreign Direct Investment (FDI) Index that ranks the markets likely to attract the most investments in the next three years. 

Competitive Tax Rates 

Corporations in Taiwan are subjected to one of the lowest corporate income tax rates in the world. Properly structured, entities in Taiwan’s Free Trade Zones are granted a corporate income tax exemption by the Taiwan government when requirements are satisfied. 

Otherwise, a 20% Corporate Income Tax will be applicable which is relatively low in comparison to the Worldwide Average Statutory Corporate Income Tax Rate of approximately 24%, measured across 176 jurisdictions. 

Business-Friendly Environment 

In the World Bank’s Doing Business 2020, Taiwan is ranked 15th worldwide in terms of the ease of doing business. As Taiwan does not impose excessive bureaucracy and legal restrictions on foreign investors starting a business, this exhibits Taiwan’s conducive regulatory environment for foreign investors. 

Moreover, good governance and transparency is a crucial consideration for individuals looking to set up their businesses. According to the Corruption Perceptions Index (CPI) published by the Transparency International Organisation, Taiwan ranked 28th out of the 180 countries evaluated. The CPI is the leading global indicator of public sector corruption. Taiwan’s CPI ranking implies a low risk of corruptive activities in the public sector, which strengthens the confidence of an investor to start a business in Taiwan. 

Supportive Startup Community 

Taiwan boasts a vibrant and welcoming start-up environment for those looking to start a business. Taiwan government provides a plethora of government resources and support to aspiring entrepreneurs who wish to kickstart their entrepreneurship journey in Taiwan. Taiwan Tech Arena, a government funded start-up program, champions entrepreneurship and innovation with the purpose of building a vibrant international startup ecosystem in Taiwan. Tech start-ups are provided with funding to create new tech ventures. Moreover, Taiwan Tech Arena is an ideal platform for collaborative efforts between tech start-ups and corporations. It offers multiple accelerator programs which usually run for 6 months at a time. 

Taiwan company registration is hassle-free if you are familiar with the entire incorporation process. Tetra Consultants strives to provide our clients with a seamless experience when setting up a company in Taiwan. Our team of experts will ensure that your Taiwan company can be operationally ready as soon as possible.

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