Why You Should Move Your Business Offshore
Relocation of existing companies to overseas jurisdictions is quickly becoming a popular practice among business owners. Offshore destinations like Panama, the British Virgin Islands, Belize or Anguilla offer stable economic and political environments that enable foreign companies to internationalize their operations, increase profit margins and access new markets. Although offshoring is often associated with tax evasion, it’s a completely legitimate business strategy. American corporations alone are legally holding about $1.4 trillion in various offshore jurisdictions, according to a 2016 Oxfam report.So, why exactly should you move your business offshore? Is it a worthy move? Read on to find out.
Take Advantage of Low Taxes
High corporation taxes can have a destructive effect on businesses. Not only do they take away a significant portion of their profits, but also force corporations to adopt cost-reduction measures, such as job cuts and low wages. Yet, advanced economies like the US and the UK have some of the highest corporate tax rates in the world (39 and 20 percent, respectively).As such, the primary benefit of moving your business offshore is to take advantage of low taxes. Many offshore territories, popularly known as tax havens, typically levy taxes at very low rates. In fact, Bahamas, Isle of Man, Bermuda, Bahrain and the Cayman Islands don’t have any corporation taxes at all. Other forms of tax, such as property tax, personal income tax, capital gains tax, stamp duty, dividend tax and inheritance tax are either not applicable or very low.
If you, therefore, feel that the tax burden in your home country is too heavy to bear, setting up an offshore or international business company (IBC) in a zero-tax jurisdiction could be the best way to ease up things.
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