In a world where the economy is so interconnected, one might wonder why a company needs to be confined to the borders of any one country. Freelance writers, tech consultants, graphic designers, and digital PR agencies usually have clients spread across the world. Larger businesses tend to pick the jurisdiction that offers the most favourable conditions of their business. Could your small home business have anything to gain with a similar strategy?
Some countries realize the competitiveness of international trade and offer convenient policies for entrepreneurs and businesses willing to take the leap and set up an offshore company in their jurisdiction. Estonia, for example, offers professionals a convenient way to set up a bank account and register a company within the European Union through its e-residency program. Switzerland, Liechtenstein, Dubai, Paraguay and Latvia don’t offer digital residency, but they offer special incentives or capital protections to businesses that move their operations overseas.
Every country is unique, which means different jurisdictions offer different advantages. Business owners need to take a closer look at their priorities and the nature of their industry before making the leap and setting up an offshore company.
Here are some of the benefits you can expect by registering your business abroad:
1. Tax efficiency
One of the primary benefits of an offshore company is the tax advantages. Smaller, more competitive countries tend to offer lower corporate tax rates, rebates for innovative businesses and simpler tax rules. Singapore, for example levies a 17% corporate tax which is lower than the average developed country. However, whether or not you can enjoy this tax benefit depends on the double-taxation treaties and tax laws in country where you live. It’s best to consult a tax expert on this.
2. Ease of doing business
Certain countries cut through all the bureaucracy to make business easier for everyone. New Zealand ranks first on this index and setting up a business there can be done online with a small fee of NZ$150 (US$100). Other places on the top ten list, such as Hong Kong, offer lower tax rates or access to certain key markets such as China.
3. Privacy
Privacy and data protections are baked into Swiss culture, which means business operations and financial transactions can be completed in Switzerland with greater discretion. This is handy when the business has a high profile and is trying to clear a deal on fair terms or operates in an industry with greater reliance on trade secrets.
4. Access to talent
Top talent is rare across the world. Higher pay and better living standards means it’s easier to find a highly skilled professional in a developed country than in an emerging or frontier market. If you’re trying to hire developers from San Francisco, designers from Tokyo, or engineers from Bangalore, an offshore company can simplify payroll and offshore payments.
5. Prestige
The cornerstone of any great business is its reputation. Sometimes, striking deals and winning customers and marketing online is easier when your company seems to have a high-profile location. Clients may be more willing to wire funds to a “corporate headquarters” in London than a home-based freelancer in Myanmar.
Looking for a competitive advantage or operational efficiencies is your primary objective as an entrepreneur. For certain businesses, an offshore company could be the perfect competitive edge.
