- What is a foreign company for, and how to use it effectively

What is a foreign company for, and how to use it effectively

What is a foreign company for, and how to use it effectively

There are two main types of complications when registering a foreign company. The first category is associated with the real development of business. The second – with organizational restructuring of an existing business, business processes and financial flows.

In the first case, the choice of country for registering a company, is usually conditioned by the target markets. For example, if you plan to start production or other location-linked business in any foreign country, then the company will be registered also there.

In the second case we are talking about the possibility of changes in the ownership structure of an existing business, transferring of the part of financial flows, and also possible transferring of the part of the administrative component to another country, while the core business continues to operate without significant changes. The aim of such restructuring can be asset protection, optimization of the use of financial resources, potential of attracting foreign loans, reducing of the level of taxation and other tasks.

Besides, it should be noted that the first category of issues can be solved in the complex with the tasks of the second group. Even in the case of presence of certain restrictions on registration of the main company because of the stationary business in the chosen country, almost always there is the possibility of additional business structuring via parent or subsidiary companies.

Various factors are taken into account when solving the problem of protection and business structuring – reliability and security of jurisdictions, tax regime, availability of agreements on avoidance of double taxation, availability of a developed banking sector and etc.

In most cases, different countries are suitable for the solution of tasks either of the first or second category. For example, the classic offshore tax-free jurisdictions such as Seychelles, Panama, Belize and etc. are convenient for tax optimization, but you will not open a real enterprise there – it is unlikely that it will make economic sense. But even if you will open it there  – the status of companies, which are exempted from taxes, for resident-companies in those countries, does not apply to them.

In the other cases, in those countries where opening a real business is attractive, there is no possibility of opening a company with no taxation, as all the resident companies in these countries are liable to taxation.

The United Arab Emirates is one of the few pleasant exceptions to the rule. The tax system of this country provides the full exemption from taxation at the level of state guarantees. Besides, such exemption applies both to companies which do not carry on business in the country, and the business, which is carried out directly in the country. For this reason, companies which are registered in the UAE are suitable for both categories of problems – for both new real business, and for solving the issues of structuring the existing business.

Besides, when opening a real business in the Emirates, for example, production, in addition to the tax benefits, there are is a whole set of advantages – low energy prices, availability of the cheap labor force, well developed powerful international logistics and the entire infrastructure for a comfortable life of employees and business owners.

Please email or call us concerning all the questions about how to take advantages of the UAE for your business – and we will gladly provide You with a free consultation.