There are many offshore jurisdictions in the world. Essentially, there are some jurisdictions which are considered as the tax haven by many banks and potential business partners. As such, it is not advisable in some cases to use a tax haven IBC (International Business Corporation) as a business front.
So what is the solution for this kind of situation? Internationally, there are some offshore jurisdictions need to pay tax on profit. We conclude that Hong Kong, UK, and Singapore companies are ideal to act as a marketing company. It makes very good sense to use Hong Kong, UK, and Singapore companies as a marketing company. Who will reject doing business with a Hong Kong, UK or Singapore company?
To fully benefit from this business structure there are rules to follow. In the illustration below, we will classify the Hong Kong, UK or Singapore company as the "onshore company"
- The onshore company will act as an agent for an offshore IBC.
- The offshore IBC will sign an agency agreement with the onshore company, specific the terms and conditions whereby the onshore company is allowed to enter into an agreement with third parties on behalf of the offshore IBC.
- To ensure the business structure is water tight, the offshore company should have nominee services in place whereby the shareholder and the director are nominees for the ultimate beneficiary owner. The onshore company or its shareholders should not be seen as the owner of the offshore IBC.
- The onshore company will represent the offshore IBC in all the business transactions which include receive of payments.
- The onshore company will invoice its customers and the offshore IBC will invoice the onshore company.
- On a periodical basis, the onshore company will pay the offshore company according to the terms and conditions of the agency agreement.