The best jurisdictions for IT business
The field of information technology can be attributed to the most dynamically developing branches of business. The prerequisites for this are the high level of income, mobility, and the huge opportunities provided by the Internet space. Nevertheless, when conducting online business, there are still problems of taxation, financial reporting, and relations with foreign partners.
The use of foreign companies as a tool for optimizing tax planning is today one of the most popular and is used by major companies such as Google, Apple and others. This scheme of doing business allows us to solve a number of important issues:
- confidentiality of company ownership;
- lack of financial reporting and exchange control;
- having a foreign bank account and the ability to manage it around the clock;
- availability of various online tools for receiving payments.
When choosing a country for doing business, it is necessary to take into account a number of factors such as the taxation system, the preservation of confidentiality of the beneficiary, and the respectability of jurisdiction. It should immediately be said that it is impossible to reduce the payment of taxes to zero in the IT sphere, in any case, the amount of tax payments will be within 5-15% of the company's income. Considering the factor of confidentiality, one should pay attention to such countries where a closed register of shareholders is maintained and nominee services are possible. And, finally, the factor of respectability: for many clients registration of a company in the Netherlands or the UK will be indicative.
In European countries, loyalty to the IT-industry and the sale of intellectual property products is expressed in partial exemption from income tax (IPBox mode). These countries include Cyprus, Scotland, the Netherlands, Luxembourg, Malta. The essence of tax benefits is to reimburse most of the tax paid or to release up to 80% of the company's income from taxation. Speaking of Ireland, it should be mentioned the “double Irish whiskey” scheme, which is known for the activities of large American companies. The simultaneous use of resident and non-resident Irish companies allows you to leave most of the income in the form of royalties on the accounts of a non-resident company.
The choice of a country for doing business depends largely on the individual characteristics of the company, the preferences of business partners and customers, territorial coverage, the ability to supply goods and the settlement system.
For a small Internet project, a classic offshore zone is suitable, where the main expense will be the registration fee. If we are talking about online commerce, then to register a company that supplies goods, it is also better to choose offshore companies, such as the British Virgin Islands, Belize or Seychelles. They are most convenient for settlements with customers.
For more complex types of e-commerce using merchant accounts, it is better to choose European jurisdictions operating in the IPBox mode mentioned above (Scotland, Cyprus, Netherlands, Luxembourg). In addition to tax breaks, the respectability indicator plays an important role, which is important for customers paying for credit card services.
If we talk about doing business in the Asian region, you should pay attention to Hong Kong, China, Singapore. Benefits are non-taxable income earned outside the country, the ability to open and manage bank accounts, and use the PayPal system. This proposal is especially important for those who work with Chinese goods.
For online lotteries or online casinos, you can pay attention to jurisdictions such as Malta or Costa Rica.
When creating holdings to optimize the taxation of income from royalties or dividends, the respectability indicator plays a crucial role, so you should pay attention to Austria, the UK, the Netherlands.
Now let's mentioned about the benefits that provide offshore companies to work with the electronic payment system PayPal, especially relevant for payments in the field of electronic commerce. Working through offshore, you can make payments without limits and provide personal data using a corporate card issued for the company. With this system you can also accept payments and withdraw funds to a bank account. This can best be done with the help of offshore companies in the UK, Hong Kong, and Singapore.
When choosing a jurisdiction to build an effective and safe business in the IT sphere, many factors should be taken into account, but first of all, you should be guided by specific goals, objectives and expected results.