Choosing the correct jurisdiction to establish a corporation and conduct a business determines virtually everything. After all, each nation and region has its own unique qualities that should be considered when deciding where to form a legal company. The local business environment has the ability to either enhance a firm and contribute to wealth generation, or it may make economic activity inefficient and unproductive. However, the most crucial consideration when selecting a jurisdiction for a prospective corporation is to determine why it is required.
Potential targets for business in 2022
The most common reasons for finding a country to create a corporation are:
- lower taxes;
- Asset protection is important;
- Preservation of confidentiality;
- Successful market entry into other countries;
- acquiring a residence permit or obtaining citizenship.
It is fantastic when a jurisdiction can optimize the application of the above criteria. However, in reality this is not the case. For example, in some jurisdictions better asset protection is available, while in others lower taxes are available. We must also consider important points such as the cost of setting up and operating a corporation in an offshore jurisdiction, the difficulty of incorporation and remote management, economic stability and infrastructure availability, and geographic remoteness.
He will be able to make the best decision by evaluating and comparing the cost of setting up the business with the goals to be achieved.
Learn how to choose a jurisdiction to incorporate using corporate strategy.
How to choose the best offshore business jurisdiction
When looking for a jurisdiction to establish a company in order to save money on taxes, consider the following factors:
Offshore jurisdictions on government listings
The lists of low-tax and high-security offshore jurisdictions will aid in the selection of a jurisdiction for business formation, which are accessible in every nation, including Ukraine, Russia, Belarus, and Kazakhstan. The government usually publishes a list of jurisdictions with corporation tax rates of 5% or less.
List of offshore companies Russia has 55 nations and territories, whereas Ukraine has 79, indicating that government agencies take distinct ways to selecting offshore jurisdictions. However, Andorra, Antigua and Barbuda, Bahrain, Cayman Islands, Mauritius, Nevis, Seychelles, the State of Delaware (USA), and Montenegro are all the same. This certainly indicates that taxing arrangements in the CIS and Ukraine are superior.
Disadvantages: If a country is on the list of offshore countries, it indicates that tax officials and banks will closely scrutinize the company’s computations.
2020 Offshore Rating
Rankings abound throughout the globe. And it’s only natural that there’s a rating of offshore jurisdictions – the Corporate Tax Haven Index, produced by the Tax Justice Network. This is a new rating (it was introduced in May 2019) that has yet to gain reputation, but it may already be used for research and selecting a jurisdiction for business formation. So, according to the Corporate Tax Haven Index, the top 10 offshore countries for 2019 are:
Top 10 offshore companies
- British Virgin Islands
- Bermuda
- Cayman Islands
- Netherlands
- Switzerland
- Luxembourg
- Jersey
- Singapore
- Bahamas
- Hong Kong
It should be noted that some jurisdictions of the above “ten” are not in the offshore lists of Ukraine, Russia, Belarus and Kazakhstan, e.g. Luxembourg. Switzerland is only in Russian list, while Netherlands is only represented by overseas territories in all lists, Singapore and Hong Kong are not in Belarusian and Kazakh lists.
Attention!!! Switzerland is a federation where each canton has its own tax code and rates. Therefore planning to register a company in Switzerland, you should carefully examine the conditions for business in each canton. For example, Zug is ideal for start-ups, and it also has the lowest corporate income tax.
By analyzing and comparing governmental lists of offshore companies and ratings you can choose the best jurisdictions to register a company in 2021 – with a minimum tax burden and the minimum attention of supervisory authorities.
More Ratings on Taxes
The ranking for Paying Taxes 2020 is already more authoritative (compiled by the World Bank and PWC). It displays the simplicity with which you can pay taxes based on four indicators: total tax burden and rate, time to satisfy all fiscal obligations, number of payments, and index after filing, and allows you to browse which prominent jurisdictions have a low fiscal burden.
According to the Paying Taxes 2020 rating, the following are the top ten jurisdictions for ease of paying taxes:
Top 10 jurisdictions for ease of paying taxes
- Bahrain
- Hong Kong
- Qatar
- Ireland
- Mauritius
- Kuwait
- Singapore
- Denmark
- New Zealand
- Finland
Disadvantages: Paying Taxes 2020 excludes prominent offshore countries such as Bermuda, the Cayman Islands, the British Virgin Islands, and many more, reducing the quality of the best country for business formation.
In 2021, where is the finest and quickest site to register a business?
When it comes to picking a jurisdiction for company registration, tax optimization is vital, but the simplicity of forming a legal organization is also significant. After all, what good is an offshore jurisdiction if it requires a corporation to be registered for many months?
This metric may be examined using the Doing Business rating. The World Bank compiles it as well, and it includes over 190 nations.
The top ten jurisdictions for ease of doing business, according to Doing Business 2020:
Top 10 jurisdictions in terms of ease of setting up a business
- New Zealand
- Singapore
- Hong Kong
- Denmark
- South Korea
- USA
- Georgia
- Great Britain
- Norway
- Sweden
The Doing Business rating should not be used as a criterion for selecting a jurisdiction in which to incorporate a business. Because it examines the economy using ten unique characteristics that describe the country’s ease of starting and running a business. However, many of these factors are uninteresting to businessmen that are mainly concerned with asset protection and low taxation. As a result, while it is feasible to establish a corporation offshore, for example, in Nevis, extremely swiftly and remotely with a minimal bundle of paperwork, this jurisdiction ranks just 139th in Doing Business.
Choosing a jurisdiction in which to incorporate a business in order to safeguard assets
Protecting the founders’ personal assets from creditors or the government is an essential aspect of the strategy for selecting a nation or region in which to start a firm. The correct structure (e.g. LLC, LLP, Corp) in most offshore countries can give this level of protection.
The Doing Business rankings and the International Property Rights Index may be used to find the jurisdiction with the best intellectual and physical property protection regulations (the latter in terms of minority investor protection only).
According to the International Property Rights Index 2020, the following are the top ten countries:
Top 10 countries for registering a company to protect assets
- Finland
- Switzerland
- New Zealand
- Singapore
- Australia
- Japan
- Sweden
- Norway
- Luxembourg
- Netherlands
Offshore jurisdictions are not included in the above ranking. It only includes 129 nations and ignores the legal systems of island republics and autonomous territories. Even offshore countries, however, manage to guarantee a high level of personal asset protection. The state of Delaware (USA), which is home to the world’s most prominent court for business cases, deserves special attention. And they continue to employ company law, which is the foundation for many low-tax regimes. It is for this reason that businesses are formed in Delaware.
Attention!!! Choosing a jurisdiction for asset protection, you should evaluate not only its prestige, but also how realistic it is to protect your assets from lawsuits.
Choosing the Best Jurisdiction for Privacy
Confidentiality of business involves the protection of personal data of the founders, directors, managers of companies. It can be secured in the following ways:
- utilizing a low-cost service
- a registration agent’s participation
- there is no duty to submit information to public databases.
- bearer shares are used.
- being a non-participant in the financial information exchange
Almost all offshore companies provide the above conditions, except for the last parameter. Who does not participate in the automatic exchange of financial information can be seen in the “gray” and “black” lists of FATF.
The Financial Secrecy Index 2020 rating will also help to choose a jurisdiction for company registration with the best level of confidentiality:
Top 10 countries for company registration with the best level of privacy
- Cayman Islands
- UNITED STATES
- Switzerland
- Hong Kong
- Singapore
- Luxembourg
- Japan
- Netherlands
- British Virgin Islands
- UAE
The rating above enables you to choose from a broad variety of jurisdictions when forming a corporation. However, it should be noted that it is not universally accepted. There is no mention of Nevis in the “top ten,” despite the fact that it is regarded as one of the greatest in terms of corporate secrecy.
In the case of the United Jurisdictions, you should be aware that the amount of anonymity varies depending on state regulations; for example, only Nevada and Texas do not share financial information with the Internal Revenue Service, and in other states, director and management lists may be public.
The best jurisdiction for registering an IT business
Many countries in order to attract IT companies create special favorable conditions for their registration and operation. When searching for a jurisdiction or offshore to register an IT firm, one should pay attention to:
- legislation is available;
- Low taxes and favorable treatment are commonplace;
- Professional personnel is available;
- entry to the worldwide market is simple.
Japan and Switzerland are the obvious leaders in terms legislation. They were the first to regulate the cryptocurrency and blockchain industries at the state level, paving the way for the establishment of top IT firms in these nations. UK, Cyprus, Estonia, Czech Republic, USA, Canada, and Georgia are just a few of the nations where IT firms may profit from tax breaks and get access to worldwide markets.
Read more about the selection of the best jurisdictions for IT businesses in 2020.
Choosing a Jurisdiction to Register a Company for Citizenship or Residence Permit
Citizenship programs frequently demand that a significant quantity of money be invested in the economy, rather than just in real estate. There are additional standards for starting a business and employing a particular amount of people from the area.
When deciding on a jurisdiction for a resident permit or citizenship, one considers the benefits of the new country’s passport: lower taxes, more freedom of movement, and easier access to particular services (education, bank loans).
The best “Citizenship for Investment” programs according to
Citizenship by Investment (CBI) 2020
Best Citizenship for Investment Programs by the CBI
- Dominica.
- St. Kitts and Nevis
- Grenada
- Saint Lucia
- Antigua and Barbuda
- Vanuatu
- Malta
- Cyprus
- Montenegro
- Turkey
And from Henley & Partners 2020:
Best Citizenship for Investment Programs by Henley & Partner
- Austria
- Portugal
- Italy
- Canada, Switzerland
- Malta
- Great Britain
- Australia
- Ireland, Latvia, USA
- Jersey, Mauritius
- Thailand
In order to get tax residency, in addition to citizenship and residence permits, a firm must be registered in a certain jurisdiction to demonstrate the country’s center of vital interests. The latter allows for a reduction in the tax burden on personal income, hence contributing to wealth preservation and accumulation.
The best jurisdictions for business and citizenship in Europe
The list of European countries which the governments of Russia, Ukraine, Belarus and Kazakhstan consider as offshore is relatively short. All four lists include: Andorra, Gibraltar, Liechtenstein, Monaco, Montenegro, and separately Malta, Cyprus and even Moldova.
The presence of a jurisdiction there indicates a low level of taxation. But apart from the latter, an important role in choosing a European country to register a company is played by:
- prestige – Switzerland, Great Britain;
- low taxes – Bulgaria, Hungary;
- geographical proximity and confidentiality – Georgia;
- availability of conditions for the development of IT-companies – Czech Republic, Poland.
The parameters that should be taken into account when choosing a European jurisdiction are many. And for a correct and informed search it is also necessary to study in detail the corporate and tax legislation of each country.
Conclusion
The choice of a jurisdiction to register a company in 2021 should be made after deciding what tasks it should perform: reduce taxes, accumulate funds, protect assets, obtain citizenship, etc. And then study the costs of its opening, maintenance, complexity of management. In this way, you can choose the best country to set up a company.
It is important to take the size of the business into account when making your choice. For relatively small companies is recommended to use jurisdictions with high privacy, low taxes – eg: offshore Nevis, Cayman Islands, British Virgin Islands, if necessary to open a firm close – then the ideal place Georgia, for large businesses suit the prestigious jurisdictions such as: UK, Delaware or Wyoming (USA).
If you are looking for a jurisdiction, offshore for business, please contact us via online chat or send an email using the special field. We will contact you as soon as possible and help you choose the best country for company registration.
