Offshore company is the most common type and name for companies incorporated in foreign countries. In fact, this type is no longer strange to the business world and has been popular for 40-50 years. Setting up an offshore company is something not everyone knows and is extremely complicated so in the following article, LSX Law firm will help you learn about what is offshore company and setting up an offshore company for your future business convenience.
What is offshore company?
Offshore companies are legal entities incorporated in territories where the local government allows tax incentives such as tax reduction; or complete exemption provided that such companies operate business activities outside the territory of the place of registration.
An offshore company is an extremely convenient and effective tool for international trade and investment activities as well as an optimal tool for preserving your capital at safe banks of international standards. As a rule, offshore companies do not require anything about tax reporting except annually paying a certain fee into the budget of the local government where the company is registered. Usually, in those countries or territories; information about directors and shareholders is rarely stored so the confidentiality of the company’s owners.
Besides, how businesses are exempt from CIT with offshore companies, for example, a business has a trading company A in Hanoi, buys a Rolex watch from Switzerland for $ 10, If company A sells that watch for $100, A will make a profit of $90 and pay corporate income tax of about 20% on this profit to the Vietnamese government.
However, if there is an offshore company B in the British Virgin Islands, company B will buy a Rolex watch for $ 10, then sell it to company A in Hanoi for $ 100. Company A sells Rolex for $100, breaking even and paying no taxes. Meanwhile, offshore company B in BVI also does not have to pay tax thanks to the 100% corporate income tax exemption policy. Thus, enterprise A has reduced the tax payable, which is one of the most basic elements of offshore companies.
What is the reason to choose an offshore company?
The company is a very important tool for business activities in all industries. Choosing the type of company depends on the following points:
- Level of business type.
- Owner confidentiality.
- Open an account at one bank or another.
- It is possible to take advantage of double taxation agreements.
- Establishment and maintenance fees.
Besides, among a variety of tools, it is necessary to choose the most optimal tool, which satisfies the conditions set forth for the business. You can get free advice from our consultants to choose the type of company that best suits your business.
Procedures for setting up an offshore company
To set up an offshore company in a foreign country, customers need to provide
The following documents:
- Valid passport (photocopy)
- One of the following invoices and must have the name and address of the company founder listed on the invoice and must be within the last 3 months: landline phone, mobile phone, electricity, water, bank statement and has a bank seal. If the invoice is not in English it should be translated; and notarized. 03 names of the intended company: You need to provide
- 03 names for the company you intend to establish for the company. In case someone has registed these 3 names; you must provide us with 3 other names and the process repeats as above.
- Business plan: You need to provide business plan for the company intending to establish, including: what kind of business, where to buy from, where to sell.
- Shareholder structure: You need to provide detailed information about each shareholder: Name, address, number of shares held (%).
Processing time is from 5 to 7 days.
Dossier of establishment of a domestic company
- Application for business registration
- Draft of Company’s charter
- List of company members (For joint stock companies and limited liability companies with two or more members)
- A valid copy of one of the authenticated papers:
+ People’s identity card (certified copy) for capital contributors being individuals;
+ Business registration certificate, for capital contributors being enterprises, establishment decision, for capital contributors being organizations;
- Other documents if having conditional business registration:
+ Certificate of legal capital;
+ Business practice certificate of the head of the enterprise; for business lines; a practicing certificate is required.
The order and procedures for setting up an Offshore company
The order and procedures for setting up an Offshore company are basically as follows:
Firstly, the business owner, legal representative or authorized person submits the soft copy on the National Business Registration Portal. Notification time is about 3 working days.
Secondly, If you receive a valid notice from Step 1; you, your legal representative or authorized person submit the hard copy application directly to the Business Registration Office.
Thirdly, after 1-2 days of submitting the paper copy, you will receive the Certificate of Business Registration at the Department of Planning and Investment
Lastly, engrave the business seal and publish the seal sample.
Time to carry out procedures for business establishment is 05 working days from the date of valid business registration office of the founder (including business registration certificate and legal entity seal).
Offshore companies are legal entities incorporated in territories where the local government allows tax incentives such as tax reduction or complete exemption provided that such companies operate business activities outside the territory of the place of registration.
Time to carry out procedures for business establishment is 05 working days; from the date of valid business registration office of the founder.