- Foreign jurisdiction as the platform for registration an IT company

Foreign jurisdiction as the platform for registration an IT company

Foreign jurisdiction as the platform for registration an IT company

Despite the growing resistance and struggle of the world powers with the so-called offshore areas, the implementation of entrepreneurial activity from the territory of offshore jurisdictions remains an effective and, what is the most important – demanded tool for business optimization. Today, a lot of international legislative initiatives, which are aimed at complicating the procedure of reducing the tax level, are taken, but the number of those who wish to register a business in the tax-free haven is not decreasing.

Activities of the IT companies and government regulation

As to the registration of a company, which is engaged in the playing field of information technologies, in view of the global nature of the Internet space, government regulation is not always an appropriate tool. Besides, the subject-matter of network space remains unexplored and unpolished in terms of legislation. If to speak about a certain systemic resistance to the offshores, in the current practice it is accepted to distinguish several key areas, in particular:

  • Exceptions and additions to the existing bilateral international agreements which are adopted in order to avoid double taxation of residents;
  • State licensing and special tax regimes for individual sectors (in our case – information technologies);
  • Development of the requirements and standards for banks and financial institutions which serve such companies.

It seems that all the taken measures are not the preventive measures, but the response of countries to the gaps and shortcomings in the normative base. Especially, it looks like that, against the background of complete incoherence between different states and emerging contradictions with international corporate law. At the same time one should understand that the fight against offshore jurisdictions continues, and the legislation is being improved by the changes and amendments.

The legislative initiative of the Eurozone serves a shining example of the intensification of resistance to offshores. So, starting this year, the participating countries of the European Union introduce new conventions, which regulate and establish the rules of conducting commerce in the networked space of the Internet. According to lawmakers, this step will help to put in order and to unify the activities of modern IT companies, which operate within the Eurozone.

Here we have approached the question of where it is best to register a newly created IT company, and whether the offshore zones are suitable for these purposes. Let’s try to gain understanding of everything one by one.

IT companies and offshore zones – what is the requirement

Taking into account the state initiative in the area of regulation of business in the Internet space, the question of optimization of the business processes in the playing field of information technologies takes on special relevance. International economic practice is not yet able to offer an alternative way to solve the problems of optimization of the taxable base and ensuring the confidentiality of information about the owners of the business. Offshore jurisdictions remain the only effective way to reduce the taxable base, and it happens in all the market niches.

That is why experts and specialists recommend modern representatives of IT business to use the time-tested offshore jurisdictions and accounts in foreign offshore banks. And they refer to the real advantages and opportunities for saving both operational and accumulated financial resources.

The advantages and benefits of using offshore jurisdictions:

  • As a rule, offshore jurisdictions impose minimum requirements to companies in respect of financial and accounting reporting.
  • Registration of a bank account in offshore company’s name – is a possibility of an efficient control and safe disposal of funds from any point of the globe at any time of the day. You can not only to receive payments from contractors and partners – it is a full bank account with all relevant functions;
  • Corporate bank account – it is an efficient tool for keeping, accumulation and handling available funds.

Algorithm of actions when registering an IT offshore company

The entire procedure of registering an IT company in an offshore jurisdiction can be divided into several successive stages, in particular:

  • Choice of an appropriate offshore jurisdiction and acquisition of an offshore company – in view of the importance of the first stage, when choosing a jurisdiction it is recommended to use the services of the qualified professionals, as it has a great impact on the success of your company. It is important to consider a number of key factors, which affect the creation  of business in an offshore territory;
  • Opening of the corporate bank account – choice of the appropriate financial institution is largely dependent on the nature of your business and the actual functional features of a personal corporate account. Besides, one should consider the degree of secrecy of information about the owners of the bank account and the ultimate beneficiaries. If you have difficulties when choosing an offshore bank, you can also contact our specialists and get a free consultation.

Key factors when choosing an offshore jurisdiction

Concerning the factors that play an important role in the choice of an offshore jurisdiction, one can single out several fundamental requirements:

  • Field of activity of an IT company, and the availability of the appropriate industry clusters;
  • Availability of an established banking infrastructure and modern financial instruments;
  • Terms of state licensing of the activities of IT companies;
  • Availability of bilateral international agreements in the area of prevention double taxation of residents;
  • Local tax policy of the country;
  • Prestige of an offshore zone and degree of protection of information and data;
  • Features of corporate law and procedures of registering an international IT company;
  • Requirements of the state to the financial and accounting statements, and also a state currency exchange regulation.

If you intend to find an offshore, or in other words, a tax-free jurisdiction, that meets all the defined criteria, you will inevitably consider the United Arab Emirates and benefits for IT business, which are offered by this country. That is why many international experts define the UAE as a leader in attracting international investments and in the number of registered international companies.

In addition to what was mentioned in the above list, this jurisdiction can offer a number of additional features and benefits for IT business. Imagine that your business is developing and actively growing in the country with the year-round beach season, and where the standard of living is among the highest in the world. Irrespective of whether you carry on a real or virtual business, the United Arab Emirates will welcome you with hospitality and will offer you the ideal conditions for living, business and leisure. With all this, the Emirates are not perceived in the international arena as an offshore zone and, therefore, the goodwill of your IT business will suffer no harm, and various sanctions, which are developed by international organizations, will not affect you.