Many Offshore nil tax jurisdictions now have prohibitive/extensive Economic Substance (“ES”) requirements in regards to Holding Companies and in particular IP Holding Companies requiring such Companies to show “Economic Substance” on the ground in that jurisdiction (eg staff and or an office and or income producing activities etc)

 

But what if you’re looking to set up a passive asset holding Company ie a Company that is being set up purely to hold your interests (eg as an investor) in another Company?

 

If you are looking to set up a pure equity Holding Company (ie to hold shares in another Company) where is the best nil tax “Offshore” jurisdiction in which to incorporate such a Company ie without having to meet prohibitive ES requirements.

 

This article considers the current options in that regard…

 

 

Panama for Holding Companies

 

Panama does not currently impose formal economic substance requirements on standard holding companies, nor does it tax foreign-sourced income.

 

Panama does not impose Economic Substance reqs.

 

All companies must maintain accounting records and supporting documentation, even if they do not earn Panama-source income.
By April 30 each year, the company must submit an annual accounting declaration through its Registered Agent. If the company has foreign-source income derived from operations conducted abroad, it must submit a copy of the accounting records as part of this declaration.
Failure to comply may result in fines and administrative penalties. I enclose a guide re accounting records.

 

To incorporate a Company in Panama with OCI usually costs $US1,500 and from 2^nd year $890.For details of what’s included in the set-up price and annual fee from 2^nd year, check these links:

 

https://www.dropbox.com/scl/fi/r43bsah70rebkudj3khpk/Incorp-Package-Standard-Inclusions.docx?rlkey=fhkty35sfxd00g7ox7jgk60fs&st=7fwasq7x&dl=0

https://www.dropbox.com/scl/fi/v0duexaw0pyz1qbkt8xlv/What-do-you-get-for-your-annual-renewal-fee-COMPANY.doc?rlkey=z36pru1r8my2trvmfdhycnrdj&st=jjba8jlq&dl=0

 

For details in regards to the features and benefits of a Panama Company check this Link: https://www.dropbox.com/scl/fi/6v1lcouehe3fiemrp5xv8/PANAMA-COMPANIES-DETAILED-FACT-SHEET.pdf?rlkey=ydh1ehbl31o6cw52dmb1olunw&st=gzdngyto&dl=0

 

 

Samoa for Holding Companies

 

Samoa remains a suitable offshore financial centre for holding and managing IP, offering a flexible and confidential framework under its International Companies Act 1988.

 

1. Setup Requirements – Samoa International Company (IC):
To incorporate an international company in Samoa, we would require:

• Proposed company name (with a few alternatives in case of name conflict)
• Details of directors and shareholders (corporate or individual permitted)
• Beneficial ownership information (not publicly filed)
• Registered office and licensed trustee/agent in Samoa (which we provide)
• Standard or bespoke Constitution (we have a standard memo)

 

2. Ongoing Compliance Obligations:

• Annual government renewal fee
• Annual trustee/registered agent service fee
• Maintenance of company records at the registered office
• No requirement to file financial statements or returns with the Registrar
• No local tax on foreign-sourced income (tax exempt)

 

There is no public register of directors, shareholders, or beneficial owners, maintaining confidentiality.

 

3. Economic Substance Requirements:

As of now, Samoa does not impose Economic Substance requirements on international companies that are passive IP holding entities (e.g., where the company merely holds IP without commercial exploitation from Samoa).

 

However, if the Samoa IC actively exploits the IP (e.g., licenses IP and earns royalties), this may attract scrutiny under OECD BEPS standards. While Samoa is currently a “nil-tax” jurisdiction, the global trend is toward substance-based regulation, so we recommend:

• Ensuring operational activities (licensing, IP development, etc.) are conducted outside Samoa
• Clearly documenting the passive holding function of the Samoa IC
• Considering a trust structure if additional layers of protection or control are desired

 

To incorporate a Company in Samoa with OCI usually costs $US1,500 and from 2^nd year $890.For details of what’s included in the set-up price and annual fee from 2^nd year, check these links:

https://www.dropbox.com/scl/fi/r43bsah70rebkudj3khpk/Incorp-Package-Standard-Inclusions.docx?rlkey=fhkty35sfxd00g7ox7jgk60fs&st=7fwasq7x&dl=0

 

https://www.dropbox.com/scl/fi/v0duexaw0pyz1qbkt8xlv/What-do-you-get-for-your-annual-renewal-fee-COMPANY.doc?rlkey=z36pru1r8my2trvmfdhycnrdj&st=jjba8jlq&dl=0

 

For details in regards to the features and benefits of a Samoa Company check this Link: https://www.dropbox.com/scl/fi/v7tztj8a1lkr9bvn60anz/Samoan-Companies-Page.pdf?rlkey=quov4wimgr7uqopq4lomuymnm&st=qv1otboe&dl=0

 

 

Hong Kong For Holding Companies

 

There are no restrictions for a HK company to hold shares of other entities.

 

Are there are any special compliance or ES requirements a Holding Company in HK will need to meet???

 

In terms of registration and ongoing renewal, there’s nothing special.

 

However, in terms of profits tax, the company being a multi-national enterprise structure (MNE) should check whether receiving foreign-sourced passive income (ie dividend income & disposal gain) can be exempted from HK profits tax under the Foreign Source Income Exemption (FSIE) regime.

 

Only income received in Hong Kong is subject to the FSIE regime. “Received” includes:

 

• Remittance into a Hong Kong bank account;
• Used to settle a Hong Kong business debt;
• Used to purchase movable property brought into Hong Kong.

 

Exemption Conditions for Dividend Income

 

To qualify for exemption from profits tax on foreign-sourced dividends, the Hong Kong company must meet one of the following:

 

1. Economic Substance Requirement (ESR)

 

• Applicable to non-IP income (e.g., dividends, interest, disposal gains).

The Hong Kong company must:

• Conduct substantial economic activities in Hong Kong.
• Have adequate number of qualified employees.
• Incur adequate operating expenditures in Hong Kong.
• Outsourcing is allowed if properly monitored.

 

For pure equity-holding companies, the ESR is less stringent—mainly requiring compliance with corporate law obligations and adequate oversight.

 

2. Participation Exemption

 

• Applies to dividends and share disposal gains.

Conditions:

• The HK company must be a Hong Kong tax resident or have a permanent establishment in Hong Kong.
• Must hold at least 5% equity in the investee company for at least 12 months.
• The investee must be subject to at least 15% corporate tax in its jurisdiction.
• Must pass anti-abuse rules:
• Main purpose test (not for tax avoidance)

 

For more information about FSIE, please refer to IRD website at:  IRD : Foreign-sourced Income Exemption

 

To incorporate a Company in HK with OCI usually costs $US2,500 and from 2^nd year $1,800.For details of what’s included in the set-up price and annual fee from 2^nd year, check these links:

https://www.dropbox.com/scl/fi/y2a23l707hgrtli8v2mif/Hong-Kong-Company-Package-Inclusions.docx?rlkey=tjzqtxwckoyi32c5rblt20lhk&st=4v9hbqc4&dl=0

https://www.dropbox.com/scl/fi/j3h0dch2plgm5xmlic05g/What-do-you-get-for-your-annual-renewal-fee-HK-COMPANY.doc?rlkey=44ttqf86oy59jmy0tifchvgmx&st=9iopawnl&dl=0

 

For details in regards to the features and benefits of a Hong Kong Company check these Links: https://www.dropbox.com/scl/fi/lux40de53b7hdtxycetir/Why-Incorporate-in-Hong-Kong.docx?rlkey=fwn22c1h0mwb5l1zgo03i1rge&st=0lpfdycz&dl=0

 

 

BVI for Holding Companies

 

There are no special requirements for a passive asset holding company to be set up in the BVI.

 

The company will fall under ES as pure equity, if it will only be holding shares. Substance for pure equity will need to be set up – the fee is $1350 per annum ie on top of the usual incorporation/annual renewal fee.  If the company holds something else such as bonds it will not fall within scope as a pure equity.

 

Pure equity companies are only required to have a BVI Agent in the BVI if it is passive.  If it is an active pure equity company, eg. buying, selling, etc substance will be required.

 

To incorporate a Company in the BVI with OCI usually costs $US1,250 and from 2^nd year $1050.For details of what’s included in the set-up price and annual fee from 2^nd year, check these links:

https://www.dropbox.com/scl/fi/r43bsah70rebkudj3khpk/Incorp-Package-Standard-Inclusions.docx?rlkey=fhkty35sfxd00g7ox7jgk60fs&st=7fwasq7x&dl=0

 

https://www.dropbox.com/scl/fi/v0duexaw0pyz1qbkt8xlv/What-do-you-get-for-your-annual-renewal-fee-COMPANY.doc?rlkey=z36pru1r8my2trvmfdhycnrdj&st=jjba8jlq&dl=0

 

For details in regards to the features and benefits of a BVI Company check this Link: https://www.dropbox.com/scl/fi/6t1l4cefqfruzhij73kg8/BVI-IBC-FACT-SHEET-ECONOMIC-SUBSTANCE-GUIDANCE-NOTES-CURRENT.pdf?rlkey=jtwj4vxjs80q1ra2aab67z72l&st=pzi8u0ck&dl=0

 

 

Cayman Islands for Holding Companies

 

Along with its fellow Overseas Territories, Crown Dependencies and other international financial centres, the Cayman Islands has comprehensive legislation and regulations requiring legal entities domiciled or registered in the Islands and carrying on certain activities to have demonstrable substance in Cayman.
The International Tax Co-operation (Economic Substance) Act (Act) reflects Cayman’s commitment to its obligations as a member of the OECD / G20 global Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and corresponding EU requirements for no or nominal tax jurisdictions.
This briefing summarises the key elements of the Act, which has been subject to various updates since its introduction, and draws upon guidance (Guidance) and enforcement guidelines (Enforcement Guidelines) issued by the Cayman Islands Department for International Tax Co-Operation (DITC) which has responsibility for the supervision and implementation of the Act.

 

 

Overview

 

Before 31 January each year all entities must submit an Economic Substance Notification to the Cayman Islands Registrar

 

Within 12 months after financial year end all Relevant Entities that carried on one or more Relevant Activities must submit an Economic Substance Return to the DITC

 

Within 12 months after financial year end all entities that claimed to be tax resident outside of the Cayman Islands and that carried on one or more Relevant Activities must submit an Economic substance return – tax resident in another jurisdiction form (TRO Form) to the DITC

 

The Act requires that each legal entity domiciled or registered in the Cayman Islands must make an annual notification (referred to as an Economic Substance Notification or ESN) as to whether or not it was carrying on one or more of a defined list of activities (Relevant Activities) in the prior year and if it was, the date of its financial year end, whether it is tax resident in a jurisdiction outside of the Cayman Islands and certain identification and contact information. Entities which are in scope (Relevant Entities) and which were conducting any Relevant Activity are required to meet an economic substance test (ES Test) in respect of such Relevant Activity.
The requirements of the ES Test vary depending on the Relevant Activities conducted, and each Relevant Entity conducting one or more Relevant Activities must make an annual report (referred to as an Economic Substance Return) in order to enable their compliance with the requirements of the ES Test to be assessed or submit a TRO Form where the Relevant Entity is tax resident outside of Cayman. The DITC is responsible for determining whether a Relevant Entity has satisfied the ES Test.

 

 

Relevant Entities

 

 

Relevant Entities include all Cayman companies (including foundation companies), LLCs, LLPs, registered foreign companies and partnerships (including exempted limited partnerships, general partnerships, limited partnerships and foreign limited partnerships), except:

 

(a)   investment funds or entities through which investment funds directly or indirectly invest or operate

(b)   entities which are tax resident outside of the Cayman Islands (including, subject to certain conditions, entities which are disregarded entities for US income tax purposes)

(c)   entities which are authorised to carry on business locally in the Cayman Islands as a domestic company or local partnership

 

An entity which carried on a Relevant Activity in the reporting year and which claims tax residency outside the Cayman Islands must submit an annual return declaring the jurisdiction in which it is tax resident and providing documentary evidence of its tax residency outside the Islands. This return also includes information on the entity’s immediate parent, ultimate parent and ultimate beneficial owner. All information submitted by such an entity to the DITC will be shared with tax authorities in the jurisdiction in which they are claiming residence and the jurisdictions of their immediate parent, ultimate parent and ultimate beneficial owner.
An entity which meets the definition of an investment fund in the Act, which may be the investment fund itself or an entity through which an investment fund directly or indirectly invests or operates (which would also generally include the general partner of an investment fund), is not a Relevant Entity and is not subject to an ES Test. It is, however, required to file an annual Economic Substance Notification to notify the DITC of its classification as an investment fund and to provide fund registration details (where relevant).

 

 

Relevant Activities
The Relevant Activities are:

 

• fund management business
• banking business
• insurance business
• financing and leasing business
• shipping business
• distribution and service centre business
• headquarters business
• intellectual property business; and
• holding company business.

 

The Guidance issued by the DITC provides detailed information and sector-specific examples regarding the scope of each of these Relevant Activities and, other than investment funds, all entities will need to consider their operational activities carefully in order to determine whether they may be conducting a Relevant Activity.

 

The ES Test

 

Relevant Entities that carry on a Relevant Activity must satisfy the ES Test and, where a Relevant Entity carries on more than one Relevant Activity, it must satisfy, and report on its compliance with, the ES Test in respect of each such Relevant Activity. To satisfy the ES Test in relation to a particular Relevant Activity, a Relevant Entity must:

 

• carry on its “core income generating activities” in relation to that Relevant Activity in the Cayman Islands
• be “directed and managed” in an appropriate manner in the Cayman Islands in relation to that Relevant Activity
• having regard to the level of relevant income derived from the Relevant Activity carried out in Cayman:

(a)   have an adequate amount of operating expenditure incurred in Cayman

(b)   have adequate physical presence (which may include maintaining a place of business  or plant, property and equipment) in the Cayman Islands

(c)   have an adequate number of full-time employees or other personnel with appropriate qualifications in Cayman (note that these may include outsourced personnel provided they are located in Cayman)

 

A Relevant Entity may satisfy the requirement that its core income generating activities be carried out in Cayman if those activities are conducted by any person and the Relevant Entity is able to monitor and control the carrying out of the core income generating activities by that other person, meaning it is permissible for Relevant Entities to implement appropriate outsourcing arrangements with service providers in Cayman. Core income generating activities should not be outsourced to service providers outside Cayman. Wherever an entity outsources core income generating activities, the outsourced service provider will be required to verify certain information regarding the outsourcing arrangement to the DITC.
The concept of holding company business (which is one of the nine Relevant Activities) is limited to Relevant Entities that only hold equity participations in other entities and only earn dividends and capital gains (known as Pure Equity Holding Companies). A Pure Equity Holding Company is subject to a reduced ES Test which is satisfied if it confirms that it has complied with all applicable filing requirements under relevant Cayman Islands legislation and has adequate human resources and premises in Cayman for holding and managing equity participations in other entities. In practice a Pure Equity Holding Company will commonly be able to satisfy the reduced ES Test by appointing a reputable registered office in Cayman.
Relevant Entities conducting “high risk intellectual property business” are subject to a higher burden of proof in demonstrating that they maintain adequate economic substance in Cayman. High risk intellectual property business generally includes scenarios where an entity did not create the IP which it holds and now generates income from that IP either by licensing it to other group entities or as a consequence of the activities of other group entities.
In order to meet the ES Test, an entity conducting high risk IP business must provide the DITC with materials which demonstrate that there is, and historically has been, a high degree of control over the development, exploitation, maintenance, protection and enhancement of relevant IP assets, exercised by an adequate number of full-time employees with the necessary qualifications that permanently reside and / or perform their activities within Cayman.
The Guidance issued by the DITC provides further information as to the meaning of “adequate” and “appropriate” for the purposes of the ES Test. Notably, such Guidance accepts that what is adequate or appropriate for each Relevant Entity will be dependent on the particular facts of the Relevant Entity and its business activity and requires that the directors (or equivalent) of each Relevant Entity make a determination on these matters in good faith.

 

 

Core income generating activities
The Act defines “core income generating activities” (CIGA) as activities that are of central importance to a Relevant Entity in terms of generating relevant income (meaning income derived from the Relevant Activity) and requires that these be carried on in Cayman. The Act provides examples of core income generating activities for each Relevant Activity. For example, for financing and leasing business, CIGA include:

 

• negotiating or agreeing funding terms
• identifying and acquiring assets to be leased
• setting the terms and duration of financing and leasing
• monitoring and revising financing or leasing agreements and managing risks associated with such financing or leasing agreements

 

These lists of CIGA are not prescriptive and it is not the case that a Relevant Entity which conducts the Relevant Activity must conduct all of the listed CIGA. However, to the extent the Relevant entity does conduct the relevant CIGA, that CIGA must be conducted in the Cayman Islands. It should also be noted that where a Relevant Entity contracts to conduct a CIGA, it will be considered to be doing such an activity notwithstanding any delegation arrangement.

 

 

Directed and managed
To be considered to be “directed and managed” in an appropriate manner in Cayman generally requires that:

 

• the Relevant Entity’s board of directors, as a whole, has the appropriate knowledge and expertise to discharge its duties as a board of directors in relation to the Relevant Activity
• meetings of the board of directors are held in Cayman at adequate frequencies given the level of decision making required in relation to the Relevant Activity
• there is a quorum of directors present in Cayman during the meetings described in the second bullet point above
• the minutes of the board of directors record the making of strategic decisions of the Relevant Entity at the board meetings held in Cayman
• the minutes of all meetings of the board of directors, together with other appropriate records of the Relevant Entity, are kept in Cayman

 

A meeting will be considered to be validly held in Cayman for these purposes only if:

 

• the situation of that meeting would be deemed to be in Cayman under the constitutional documents of the Relevant Entity (this is commonly decided by the location of the chairman of the relevant meeting)
• at least that number of directors of the Relevant Entity constituting a quorum are physically present in Cayman for the meeting

 

Key dates
The Act and accompanying regulations provide a timetable for compliance, notification and reporting.

 

 

Compliance
The ES Test must be satisfied from the date on which the Relevant Entity commences the Relevant Activity until the date that the Relevant Entity ceases carrying on the Relevant Activity (or ceases to be a Relevant Entity).

 

 

Notification
By 31 January in each calendar year, all legal entities domiciled or registered in the Cayman Islands must file an Economic Substance Notification to notify the DITC as to whether they conducted any Relevant Activities and whether they were a Relevant Entity during their financial year which commenced in the prior calendar year (that is the notification in 2025 would relate to financial years commenced in 2024, whether that be 1 January 2024 or 1 September 2024, for example).
This notification is made via the entity’s registered office to the Cayman Islands Registrar. Notwithstanding the 31 January deadline, no penalties accrue unless the notification has not been submitted by 31 March. Any legal entity which intends to terminate, migrate to another jurisdiction, deregister as a foreign company or be merged or consolidated with one or more other entities, is required to submit a notification for the current year before it becomes deactivated by the Cayman Islands Registrar.

 

 

Reporting for Relevant Entities

Each Relevant Entity conducting a Relevant Activity must submit an Economic Substance Return to the DITC within 12 months of the end of its financial year regarding its compliance with the ES Test during that financial year. This return includes various financial, ownership and other data and any Relevant Entity conducting a Relevant Activity must also provide its books of account or financial statements for the relevant financial year.

 

 

Reporting for entities claiming tax residency outside of the Cayman Islands

Each entity that carried on a Relevant Activity but which is not a Relevant Entity by reason of its tax residency in a jurisdiction other than the Cayman Islands must submit a TRO Form to the DITC within 12 months of the end of its financial year. As noted above, this includes providing documentary evidence of its tax residency outside Cayman and providing information on the entity’s immediate parent, ultimate parent and ultimate beneficial owner.

 

 

Record keeping
A Relevant Entity that is required to satisfy the ES Test in relation to a Relevant Activity must retain for six years after the end of its financial year records that relate to the information required to be provided to the DITC.

 

To incorporate a Company in the Caymans with OCI usually costs $US $US 3,271.50 and from 2^nd year $$2,721.50. For details of what’s included in the set-up price and annual fee from 2^nd year, check these links:

https://www.dropbox.com/scl/fi/r43bsah70rebkudj3khpk/Incorp-Package-Standard-Inclusions.docx?rlkey=fhkty35sfxd00g7ox7jgk60fs&st=7fwasq7x&dl=0

 

https://www.dropbox.com/scl/fi/v0duexaw0pyz1qbkt8xlv/What-do-you-get-for-your-annual-renewal-fee-COMPANY.doc?rlkey=z36pru1r8my2trvmfdhycnrdj&st=jjba8jlq&dl=0

 

For details in regards to the features and benefits of a Caymans Exempt Company check this Link: https://www.dropbox.com/scl/fi/unchix11ik987n9x3gl9y/Caymans-Exempt-Companies-Fact-Sheet.docx?rlkey=oezdaxq7s2gh4h5shx5z3y5hh&st=mekwvb8r&dl=0

 

 

 

For some years now the British Virgin Islands has the been the jurisdiction of choice for Start Up Fund Managers and Established Fund Managers alike.

 

If you’re looking to launch a Fund then you’ll be pleased to know that the BVI offers multiple alternatives including:

 

• The BVI Incubator Fund
• The BVI Approved Fund
• The BVI Private Fund
• The BVI Professional Fund &
• The BVI Public Fund

 

For a detailed summation of all the above options check this Link: https://offshoreincorporate.com/bvi-investment-funds/

 

For most Start Up Funds the choice will come down to setting up either a BVI Incubator Fund or a BVI Approved Fund. The purpose of this article is to take a detailed look at the features of, and the differences as between, the two options.

 

The BVI Incubator Fund

 

The BVI Incubator fund (the “Incubator Fund”) is geared towards start up investment managers who wish to offer investments into a regulated investment fund at a reasonable cost to build up their track record. The key characteristics of an Incubator Fund are:

• The total number of investors is restricted to 20,
• An investor must initially invest at least USD20,000,
• The net assets of the Incubator Fund must not exceed USD20,000,000 (or its equivalent in any other currency),
• No requirement to have an offering document in place,
• No requirement to have third party service providers appointed,
• No requirement to file audited financial statements, and
• The life span is limited to 2 years (or 3 if an extension is granted) after which an Incubator Fund may be converted into a Professional Fund, a Private Fund or an Approved Fund. Alternatively, an Incubator Fund can also be converted into an unregulated closed-ended fund.

 

An Incubator Fund must:

• Have two directors, one of which must be an individual
• Have a BVI based authorised representative (which is a service that OCI can/will provide). The authorised representative will serve as a conduit between the fund and the BVI Financial Services Commission (the “FSC”),
• Submit financial statements annually (which need not be audited),
• Submit returns to the FSC regarding its status, i.e. the number of investors, total investments, aggregate subscriptions and redemptions, net asset value of the fund and details of any significant investor complaints; and
• Notify the FSC within 14 days of any changes to the information provided in the application or in relation to any matter which is likely to have a material impact on the fund.

 

The BVI Approved Fund

 

The approved fund (the “Approved Fund”) is geared towards ‘family and friends’ funds managers. Its key characteristics are:

• The total number of investors is restricted to 20
• Net assets of the Approved Fund must not exceed USD100,000,000 (or its equivalent in any other currency)
• No minimum investment
• No requirement to have an offering document in place
• No requirement to have third party service providers appointed, except for appointment of a fund administrator which will, in short, provide the Approved Fund with registrar and transfer agent and net asset value calculation services, and
• No requirement to file audited financial statements

 

Although not required by law, in practice the Approved Fund will often have a third-party investment manager appointed.

 

An Approved Fund must:

• Have two directors, one of which must be an individual
• Have an authorised representative
• Submit financial statements annually (which need not be audited),
• Submit returns to the FSC regarding its status, i.e. the number of investors, total investments, aggregate subscriptions and redemptions, net asset value of the fund and details of any significant investor complaints; and
• Notify the FSC within 14 days of any changes to the information provided in the application or in relation to any matter which is likely to have a material impact on the fund.

 

If you want to keep Fund Admin in-house you could potentially apply for an Approved Manager’s License.  This license/qualification offers investment fund managers and advisors a simple and cost-efficient approval process in obtaining a licence for the provision of management or advisory services to BVI and certain foreign funds (including for example Jersey and Cayman Islands funds) or entities bearing similar characteristics to a fund.

 

Incubator Fund Requirements

 

A BVI Incubator Fund has a minimum investment requirement of US$20,000, a cap on net assets of US$20M and can take in no more than of 20 investors. An Incubator Fund does not need to appoint an Administrator or a Custodian or an Investment Manager or an Auditor.

 

An Approved Fund has a net asset cap of US$100 Million and no minimum investment requirement but is limited to no more than 20 investors. An approved fund is required to appoint an Administrator but does not need to appoint a Custodian or an Investment Manager or an Auditor.

 

Application Process

 

An applications for approval as an Incubator Fund or an Approved Fund must be lodged with the Commission and be accompanied by:

 

• the constitutional documents;
• details of the investment strategy;
• a prescribed form of investor warning; and
• an application fee (US$1,500).

 

An Incubator Fund or Approved Fund can commence business 2 days from the date of receipt of a completed application by the Commission.

 

Duration & Conversion of Incubator Fund

 

An Incubator Fund has a limited life span of two years which can be extended for up to 12 months. An Approved Fund has no such limits. An Incubator Fund can convert to an Approved Fund, a Private Fund or a Professional fund, or may be wound up at the end of its term. An Incubator Fund can convert to a Private Fund or a Professional Fund or to an Approved Fund by lodging the required/prescribed application with the Commission.

 

Ongoing Obligations

 

Part of what keeps the set up and admin costs low is that service provider requirements are minimal:- Each fund is only required to appoint an Authorized Representative in the BVI and an Approved Fund is required to have an Administrator at all times. Pleasingly, there are no mandatory custody requirements and there is no requirement for the issuance of an Offering Document. If/where the fund decides to not issue an Offering Document, the required investor warnings can be set forth in a separate Term Sheet.

 

The key regulatory requirements for an Incubator Fund and Approved Fund are:

 

• An annual fee of US$1,000 is payable to the Commission on or before 31 March of each year
• Must have a minimum of two directors at all times, one of whom must be an individual
• The Fund Entity must notify the Commission of any change to any of the information submitted to the Commission in the set-up application; (eg you’d need to advise of any conduct which has, or is likely to have, a material impact or significant regulatory impact, changes to directors, etc changes to ownership/promoter structure etc).
• Prepare and file annual financial statements with the Commission (note there is no requirement for an independent audit)
• Twice a year you must file a return with the Commission

 

The main advantage of the BVI is that is attractive to investors – it has a proven name/track record in the International Financial Services world in that its perceived to be a safe and well-regulated jurisdiction. Setting up in the BVI should also assist you to get access to the widest range of Banks/Brokers/Crypto Exchanges etc. (Along with the more expensive/more heavily regulated Cayman Islands), over the course of the past 20 years, the BVI has grown to become THE GO TO jurisdiction for Fund Managers/promoters.

 

The BVI Government advertising claims that you can get a BVI Incubator fund approved within 6 weeks. That is grossly misleading. The process of creating an Incubator or Approved Fund and getting it licensed is like building a house. When building a house you need to engage a qualified Builder to find/hire/manage the various tradesmen and to help you navigate your way through the approvals/registration/licensing process. It’s the same with setting up a first time Fund. Like building a house, the entire process to get a BVI Incubator Fund or Approved Fund to the licensed/operational stage can take 6 months. To make the process happen as quickly as possible (and to ensure you get the right advice/guidance and don’t run aground on unseen reefs!) you need to hire a Corporate Services Provider that knows (or can find) and can bring together all the various players for you (including Lawyers, Specialist Company Incorporators, local Authorized Representatives, BVI Registered Agents/Registered Office providers, Fund administrators, nominees, banks etc). OCI can perform that role for you. We have set up multiple versions of both Incubator Funds and Approved Funds in the past 12 months and are well versed with the current regulatory landscape in the BVI.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

Recently Belize took steps to make Belize IBCs liable for tax in Belize. (Check this article which explains: https://www.dropbox.com/scl/fi/o7395wjgx6ilmle8dcpah/Belize-IBCs-Tax-Position-at-16.10.24.docx?rlkey=0xd4m3sjrmyhu0a5u7isxdrur&st=8eeite23&dl=0 )

 

But what about Belize LLCs??? Are they liable for tax in Belize?

 

A Belize LLC must apply for a Tax Identification Number (TIN) using Form 100, selecting the sole proprietorship option assuming it has a single member – which most (smart) Belize LLC owners have ie most clients choose to deploy a Private Foundation to act as shareholder ie to try and avoid CFC rules. (You can view the Form 100 via this Link: https://www.dropbox.com/scl/fi/1spa28x6ain98632wxv13/BTS100-Form-1-3.xlsx?rlkey=nizl6lhq9l0hi9021fuwe6t8p&st=6kgemos9&dl=0 )

 

LLCs are pass through entities ie they are akin to partnerships and in the case of Partnerships the income is attributed ie “passed through” to the partners/members (ie shareholders) who are liable to declare that income at home ie if they live in a taxable jurisdiction.

 

At present, where the sole member (ie shareholder) of a Belize LLC is a non-resident and the LLC has no Belize-sourced income, BTSD (the Belize Tax Service Department) has not issued any formal mechanism to attribute or collect tax from the foreign member. Accordingly, while TIN registration is required, there is no current indication that tax would be payable in Belize based on the information provided.

 

But what does the legislation say?

 

Section 94 of the recently amended Belizean International Limited Liability Companies Act states:

 

94.–(1) A limited liability company shall be subject to income tax, business tax, withholding tax, asset tax, gift tax, profits tax, capital gains tax, distributions tax, inheritance tax, estate duty or any other like tax based upon or measured by assets or income originating outside of Belize or in connection with matters of administration that may occur in Belize and the payment of stamp duties.

 

(2) For the purposes of income and business tax under the Income and Business Tax Act, a limited liability company–

 

(a)  with only a single member, shall be deemed a disregarded entity whose income and receipts shall be deemed the income and receipts of the single member;

(b)  with at least two members, shall be taxed as a partnership, unless such limited liability company elects, in the manner prescribed, to be taxed as a company.

 

If a Belize LLC is deemed a disregarded entity, doesn’t that mean that the income is attributed to the foreign member directly who is not a Belizean tax resident and consequently, should not be liable to pay any tax in Belize?”

 

This section of the Legislation seems to confirm that Belize LLCs are NOT liable for tax in Belize…

 

(This guidance is based on current BTSD practice and our understanding as of today’s date ie 3.8.25. We cannot rule out the possibility that BTSD may issue new guidance or take a different position in the future).

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

 

 

 

The Ras AL Khaimah Digital Assets Oasis (“RAK DAO”), it is the UAE’s first and only Web3-focused Free Zone ecosystem, designed specifically by and for the digital assets sector.

 

RAK DAO collaborates across all verticals of the Web3 space, with a core aim of fostering innovation and delivering an exceptional client experience. It offers access to a comprehensive range of services, tools, and tailored solutions for businesses in this sector.

 

RAK DAO issues UAE Free Zone Trade Licenses to businesses specializing in non regulated virtual asset companies and other next generation ventures including:

Metaverse

Blockchain

Gaming

NFTs

Dapps

Artificial Intelligence

Web 3 related projects

 

Features include:

• 100% foreign ownership permitted
• Time efficient (The authority claims to be able to set up a DAO company/issue business licenses within 7 days of receiving a completed application)
• RAK DAO Companies can have a minimum of 1 Director and 1 Shareholder
• UAE Residency permits are available
• No need to travel to the UAE to incorporate (The incorporation/license application process is 100% online)
• Access to local banks: The RAK DAO Authority claims that they have established relationships with ley banking partners to ensure that any successful licensee is guaranteed a local Fiat currency bank account

 

OCI can assist you to incorporate your business in the RAK DAO Sector. To proceed with preparing a tailored proposal for your structure, you would need to furnish us (via email) with the following:

 

• KYC documents for all stakeholders
• A completed business plan (in the required format – Check this Link: https://www.dropbox.com/scl/fi/obu3vqn6b11fy2canrjw2/Questionnaire-RE-VA-Proprietary-Trading-License-V1.1.docx?rlkey=dbxhewctm3jeedjeujltntzvy&st=j7pxw0a1&dl=0 )

 

For more information check these files/brochures:

 

• A brief introduction to RAK DAO: https://www.dropbox.com/scl/fi/farmc881hxuul7ela5og9/RAK-DAO-INTRO.pdf?rlkey=f4pwg7at61lvamw94pd94k4a5&st=sqom9lv6&dl=0
• Standard company activity descriptions: https://www.dropbox.com/scl/fi/o1rocyfmzbi7tf471bj4n/Standard-Company-No-Descreption.pdf?rlkey=7l1t0w207jcrxwx2o6s5gbs6i&st=ygl27m7v&dl=0
• Business plan template: https://www.dropbox.com/scl/fi/dr81wkha2ga7h6r1ag9p5/BUSINESS-PLAN-V2.doc?rlkey=oggpdfjk42gh8z42hpjv4f380&st=ucr3zhcd&dl=0

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are we living in the golden age of Pharma?

 

Every news publication you read these days is saturated with adds from formulation chemists offering pharma products which claim:

• to help you lose weight & gain muscle easily; or
• to enhance your libido; or
• to prolong your lifespan; or
• to cure everything from high cholesterol to a broken heart!

 

If you’re in the business of manufacturing and or marketing such products you’ll be pleased to hear that such a line of business lends itself well to an “Offshore” Corporate Structuring Plan.

 

Here’s how it usually works:

 

• A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated, in a low regulation jurisdiction, to own/operate the business
• You (ie via your IBC) either develop the product or you win a contract entitling you to market the dietary supplement/pharmaceutical product in question
• You design/launch a “shop front” website which is owned by the Offshore Company
• All proprietary items (including also logos, artwork, brand or product names/IP, Operating software/systems, soft products to be delivered to customers etc) are owned by or assigned to the IBC
• The website ideally should be hosted in a nil tax/private Jurisdiction (Iceland is currently the most popular destination for such web hosting, Singapore is also often favoured)
• The clients find you and/or contact you via the web
• The IBC should be seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is typically achieved via the deployment of a (nil tax jurisdiction based) “Nominee” Director.
• Your standard sale agreement/website terms and conditions should provide that a contract is not formed until the customers offer is accepted by you (ie the IBC)- making the source of the income the contract.
• Before the client clicks “Buy” he/she clicks on a button acknowledging that he/she has read and agrees to be bound by your terms & conditions
• Ideally acceptance of the buyer’s offer would be provided by the IBC (which is seen to be managed/controlled from Offshore) automatically sending an email to the buyer, after he/she has paid online, concluding the contract (Offer+ Acceptance + Intention to create legal relations + tender of consideration = a contract);
• In this case the source of the income is the contract. AND if the above system is deployed (as the parties never met in a physical place to conclude the contract) the situs of the Contract ie the place where the contract of sale is formed (ie where tax may apply) is the place from which the Company is seen to be managed & controlled ie the (Nominee) Director’s domicile which should be a nil tax jurisdiction…
• Hence the income – from which the contract of sale is the source – has been/is derived, prima facie, in a zero tax jurisdiction (every time a client buys and you send an email thanking him for payment that concludes a contract of sale at law)
• An Offshore account (which can/will also be set up to receive card payments via a merchant account) is opened in a nil tax banking centre
• Customers/clients contract with and pay the IBC; All such monies are banked free of tax in the first instance
• You or your local company would/could be contracted by the IBC to manage sales/delivery of product/website maintenance/customer liaison/whatever
• (If you need a regular income) You would invoice the IBC periodically (eg monthly) for this service which income would be assessable income in your home state – though a smart Tax Accountant should be able to assist you to claim a series of expenses against this income (eg home office, equipment, travel, out of office meals, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income (assessable income less allowable deductions = taxable income)
• The remainder of the IBCs sales revenue is banked and/or reinvested tax free offshore
• Ideally once your business starts to grow and to add substance you would be wise to set up your MD/Board and or a sales team to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google business models).

 

Ideally, so that you can swear on oath in the event of a tax investigation, law suit or regulatory inquiry – I am not the beneficial owner of this Company, (which should enable your lawyers to argue, in the event of an investigation, sorry this is tax deferral not tax evasion) it would be wise to set up a Private Foundation to act as the shareholder of your IBC. This should also assist you to get around CFC rules ie if you live in a country which has such regs.

 

For more details on what CFC laws are check this link: https://www.dropbox.com/scl/fi/6k5w0cc5rgtbfdwe2wc4d/What-is-a-Controlled-Foreign-Corporation-Law.docx?rlkey=asb0fgmgn4y9kb369aw26u50w&st=nyrb347y&dl=0

 

For more details on what a Foundation is and how one can be deployed check these links: https://www.dropbox.com/scl/fi/su8xw70q5x81xs39xn1aq/Why-set-up-a-Foundation.pdf?rlkey=7r3w6bdaypaxbiexvsd9lam0m&st=i7tntzjt&dl=0

https://offshoreincorporate.com/private-interest-foundations/

 

With a bespoke legal/admin structure in place you should only be liable to declare and pay tax on income paid to you by the company (and/or on any distributions paid to you by the Foundation); The rest of your Pharma Company’s earnings you should be able to accumulate, and or reinvest, Offshore in a nil tax environment. Tax should only be payable when you sell the business (unless at that time you’re living in a nil tax country) enabling you to grow your capital far quicker during the lifetime of your business thanks to the power of compounding.

 

Similarly, if a product that you sell doesn’t perform and a customer tries to sue you the good news is your personal assets should not be at risk as the customer has contracted with a limited liability Company (ie the Company carries the legal risk, not you personally). Moreover, having your business incorporated Offshore in a foreign/strange land is of itself a deterrent to such law suits. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyers equivalent of climbing Mount Everest!).

 

Moreover given the controversial nature of and heavy regulation of such products (eg in many offshore jurisdictions you would need a special license to sell such products) incorporating Offshore ie in a low regulation can also enable you to avoid regulatory arbitrage.

 

That said, local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an IBC for such purposes.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

Have you accumulated valuable knowledge in terms of how regular businesses can benefit from the deployment of Artificial Intelligence (“AI”)?

 

Are you considering selling that knowledge on a Consultancy or Contract basis?

 

If so, you’ll be pleased to hear that such a line of work/business lends itself well to an “Offshore” Corporate Structuring Plan.

 

Conceptually there are two ways you could go about this from an “Offshore” perspective:

 

(a)  You set up a nil tax Offshore Company. The client/customer signs a services agreement and pays the Offshore Company which then subtracts performance of the on-the-ground work to you or local company (See below for details); or

 

(b)  You/your local Company characterises your business service system as being IP (Intellectual Property) based. The ownership of this IP is transferred to a nil tax Offshore Company. The customer signs an agreement with your local Company but every time the onshore Company invoices a client it pays a Royalty or License Fee to the tax-free Offshore Company (which payment is of course receipted tax free).

 

Most Consultants usually prefer to adopt Option A.

 

Like most people I’m guessing what you’d really like to know is how to run an AI Consulting Business tax effectively from Offshore. Essentially how it works is:

 

• A nil tax Offshore Company (commonly an International Business Company “IBC”) is incorporated
• An Offshore account is set up for/in the name of the IBC in a nil tax banking centre
• Customers/clients (ie your Employer if you’re a Contractor) contract with and pays the IBC. The IBC is seen to invoice its clients from Offshore. Payment for invoices rendered are banked free of tax in the first instance.
• In the case of an online based business (ie where orders are received/fulfilled and or work is done Online) typically tax liability lies only in the country from which the Company is seen to be managed and controlled. Ideally your IBC would be seen to be managed & controlled from Offshore ie from a nil tax jurisdiction.
• To ensure that your IBC is seen to be managed and controlled from Offshore the Company would be structured with a (nil tax jurisdiction based) Nominee Director/Shareholder; Ideally (and especially if you live in a country which has CFC laws) the owner/beneficial owner of the Company would also be seen to be based Offshore (which may be achieved by deploying a Private Foundation to act as shareholder of your IBC)
• The IBC would invoice the Client/Employer for the work that you do (this could be at an agreed hourly rate or daily rate or on a per job basis)
• The source of the income is the contract. Each work contract ideally would be signed Offshore by the Nominee Director. Hence, at law, the argument goes that all/any profits earned would have been generated (and banked) Offshore ie in a nil tax environment
• You or your local company would be sub-contracted by the IBC to actually perform the services for the IBC
• You would invoice the IBC periodically (eg monthly) for this work which income would be assessable income in your home country – though a smart Tax Accountant (given your tax status as a Contractor) should be able to assist you to claim/setoff a significant quantity of tax deductible expense against this income (eg home office costs, equipment costs, travel costs, educational costs,, out of home meal expenses, phone/internet/utilities etc) to significantly reduce the amount of tax that would otherwise be payable on this income. (assessable income less allowable deductions = taxable income)
• The rest of the income earned by the IBC would be banked (and potentially invested) offshore tax free. There are also strategies that could be deployed that may enable you to redirect substantial portions of these funds onshore tax free as capital (eg for investment purposes)

 

If you’re working under Contract for just 1 or 2 clients you could also potentially characterize your AI Consulting business as a Recruitment Agency. Check the following Link which explains how that might work: https://offshoreincorporate.com/common-offshore-corporate-strategies/#9

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity

 

 

 

 

Paraplanners are Financial Services Professionals who take care of accounting, administrative and sometimes client-facing tasks for Financial Advisors & Financial Planners.

 

Paraplanners typically do much of the background “grunt” analytical work for Financial Advisers/Planners allowing the FAs/FPs to focus on client liaison.

 

Paraplanner’s duties will vary depending on their level of experience and the firm they work for. Experienced Paraplanners with good qualifications and training are likely to be completing the tasks of a Financial Planner. These tasks require a higher level of competence and responsibility and can range from taking notes in client meetings and updating client records to analysing financial statements and performing projections.
Instead of only doing back-office tasks and duties like junior Paraplanners, experienced Paraplanners will sometimes complete client facing tasks as well. This may include reviewing investment portfolios, building relationships with clients and organising planning meetings with clients.

 

It is becoming increasingly common in the Financial Services world to outsource Paraplanning work to contractors. If you are a Paraplanner working under contract (or looking to work under an outsourced contract basis) you’ll be pleased to hear that such a business lends itself well to an “Offshore” Corporate Structuring Plan.

 

No matter whether you a Civil Engineer, Software Developer, Accounting/Finance Professional or some other kind of skilled worker if you are able to work online or on the ground outside of your home country (or even if you are simply employed locally on a contract basis) the opportunity exists for you to potentially minimise your tax via “Offshore” Incorporation.

 

Contractors capable of receiving “orders” (ie work instructions) online and delivering services online would include:

• IT professionals
• Design professionals (eg Engineers, Architects, Draftsmen etc)
• Finance Professionals (including Paraplanners)
• Marketing Professionals
• Day Traders (eg when working as a contracted/authorised Trader for a Fund)
• Etc.

 

If you fit into one of the above categories here’s how an Offshore Corporate Structure could work for you:

• A nil tax Offshore Company (commonly an International Business Company “IBC”) is incorporated
• An Offshore account is set up for/in the name of the IBC in a nil tax banking centre
• Customers/clients (ie your Employer) contracts with and pays the IBC. The IBC is seen to invoice its clients from Offshore. Payment for invoices rendered are banked free of tax in the first instance.
• In the case of an online based business (ie where orders are received/fulfilled and or work is done Online) typically tax liability lies only in the country from which the Company is seen to be managed and controlled. Ideally your IBC would be seen to be managed & controlled from Offshore ie from a nil tax jurisdiction.
• To ensure that your IBC is seen to be managed and controlled from Offshore the Company would be structured with a (nil tax jurisdiction based) Nominee Director/Shareholder; Ideally (and especially if you live in a country which has CFC laws) the owner/beneficial owner of the Company would also be seen to be based Offshore (which may be achieved by deploying a Private Foundation to act as shareholder of your IBC)
• The IBC would invoice the Employer for the work that you do (this could be at an agreed hourly rate or daily rate or on a per job basis)
• The source of the income is the contract. Each work contract ideally would be signed Offshore by the Nominee Director. Hence, at law, the argument goes that all/any profits earned would have been generated (and banked) Offshore ie in a nil tax environment
• You or your local company would be sub-contracted by the IBC to actually perform the services for the IBC
• You would invoice the IBC periodically (eg monthly) for this work which income would be assessable income in your home country – though a smart Tax Accountant (given your tax status as a Contractor) should be able to assist you to claim/setoff a significant quantity of tax deductible expense against this income (eg home office costs, equipment costs, travel costs, educational costs,, out of home meal expenses, phone/internet/utilities etc) to significantly reduce the amount of tax that would otherwise be payable on this income. (assessable income less allowable deductions = taxable income)
• The rest of the income earned by the IBC would be banked (and potentially invested) offshore tax free. There are also strategies that could be deployed that may enable you to redirect substantial portions of these funds onshore tax free as capital (eg for investment purposes)

 

You could also potentially characterize your Paraplanning business a Recruitment Agency. Check the following Link which explains how that might work: https://offshoreincorporate.com/common-offshore-corporate-strategies/#9

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

 

 

 

Several years back the Government of St Vincent & The Grenadines (“SVG”) passed a Virtual Service Provider Act.

 

The Act however, hitherto, had been impotent in that, like a bullet train with no track to run on, the SVG Govt had not been able to find the brainpower or the wherewithal to pass the Regulations that would enable Crypto Startups to actually apply for a VASP License in SVG as contemplated by the Legislation.

 

The SVG Financial Services Authority (the “Authority”) has now formally advised us (as of 30 May 2025) that pursuant to the Virtual  Asset Business Act No. 9 of 2022, (the “VABA”) as amended, the application process for the registration of virtual asset businesses in or from within Saint. Vincent and the Grenadines will formally commence from June 2nd 2025.

Registration Requirements:

 

Entities engaged in virtual asset services, as defined under the VABA, are required to register with the Authority. This includes services such as:
1. Exchange between virtual assets and fiat currencies;
2. Exchange between different types of virtual assets;
3. Transfer of virtual assets;
4. Custody or administration of virtual assets or instruments enabling control over virtual assets;
5. Participation in and provision of financial services related to an issuer’s offer or sale of a virtual asset.

 

Application Process:

Applicants are required to submit the application form along with the necessary documentation and application fee of EC$4,000.

 

A successful application will result in the requirement of a registration fee of EC$12,000.   A statutory deposit of EC$100,000 or an amount equal to twenty-five percent of the financial obligations to clients of the registrant, whichever is greater, in cash, government securities or in any other form approved by the Minister.    

 

Annual License Renewal Fee to be paid to the government is EC$12,000.

 

($US1 = EC$2.69)

 

The application form, a copy of the regulations and a useful checklist can be accessed via these Links:

 

The Draft Regulations: https://www.dropbox.com/scl/fi/89a8a3l7kdsm123f7uqgb/Draft-Virtual-Asset-Business-Regulations-2025.pdf?rlkey=7opf1lygiu54nctx4na57nqd0&st=3neo3y79&dl=0

 

The Govt Application Form: https://www.dropbox.com/scl/fi/b7uujrepiv1msy5e4obev/VAB-Application-Form-Final.pdf?rlkey=0zad9rximmd9cobcydj2u5dvc&st=aqwmhy6m&dl=0

 

SVG VASP License Application Checklist: https://www.dropbox.com/scl/fi/d5ppq2uest8e7381ot9h1/Virtual-Assets-Business-Application-Checklist-Final.pdf?rlkey=s0903em92ct13l6rw8u0awbfq&st=jqozpdnx&dl=0

 

Regulations and Guidance on the ongoing requirements and obligations of registrants will follow.

 

Legislative Recap

 

Virtual Asset Business Act, 2022

This VABA introduced a comprehensive regulatory framework for virtual asset business activities conducted in or from within Saint Vincent and the Grenadines. The VABA sets out the requirements for registration, compliance, supervision, and ongoing obligations for entities engaged in virtual asset business including virtual asset service providers (VASPs). A copy of the Act can be accessed via this Link: https://www.dropbox.com/scl/fi/9vz6851tanfytj8ux8fsz/Virtual-Asset-Act-2022.pdf?rlkey=6lzhzbom7ga72cu04v53lr8wr&st=afcr7pvq&dl=0

 

Virtual Asset Business (Amendment) Act, 2025
On April 28th, 2025 the Act was amended to update and clarify certain provisions of the VABA.
The key amendments are as follows:

 

Commencement date: The Amendment Act sets out the date for the commencement of the Act and makes it clear that the Act comes into force on the 31st day of May, 2025.

 

Proof of Incorporation (Section 6(3)(d)): The amendment clarifies that applicants for registration must provide proof of incorporation or formation under either the SVG:
▪ Business Companies (Amendment and Consolidation) Act, or
▪ Limited Liability Companies Act.

 

Regulatory Compliance References (Sections 18(1)(a) & 19(1)(d)): The language is expanded to include not just the Act, but also Regulations made under it, ensuring that regulatory obligations apply broadly across both the Act and any subordinate legislation.

 

Final draft of Regs: The Regulations are expected to be approved without further amendments

 

Transitional Period: In accordance with the Act, all existing entities currently engaged in virtual asset activities, including those incorporated as Limited Liability Companies (LLCs) or Business Companies (BCs) engaged in virtual asset or related business, are required to submit an application for registration to the Authority within thirty (30) days of the coming into force of the Act, that is, by July 31, 2025. Entities that fail to apply within the prescribed period will be subject to an administrative striking off.

 

External Auditor Requirements

Licensed virtual asset businesses must appoint a qualified external auditor annually. Accepted qualifications include:

 

• Chartered Accountants
• Certified Public Accountants
• Members of regional accounting bodies
• Other professionally recognized accountants approved by the regulator

 

Key Auditor Responsibilities Include:

• Reviewing financial records and preparing audited annual financial statements
• Assessing the effectiveness of internal controls and risk management
• Evaluating AML/CFT compliance measures
• Reporting any significant regulatory breaches or suspicious transactions
• Audited financial statements must be submitted within a set timeframe following the financial year-end.

 

Fit and Proper Requirements

All individuals in significant roles—including directors, executives, beneficial owners, and senior officers—must meet fit and proper criteria. The assessment areas include:

 

• Financial soundness and stability
• Educational background and relevant industry experience
• Good reputation and high standards of integrity
• Absence of conflicts of interest
• Ethical history in professional and business conduct

 

Disqualifying Factors include:

• Previous involvement in fraud or dishonesty
• Poor compliance history or regulatory sanctions
• Bankruptcy, insolvency, or ongoing financial judgments
• Employment history suggesting misconduct or mismanagement

 

Applicants should be prepared to provide documentation supporting the suitability of all key individuals.

 

Capital Requirements and Statutory Deposit

To ensure financial resilience and protect client interests, licensed businesses must maintain a statutory deposit with the Regulator. The required amount is based on either a fixed minimum or a percentage of client obligations, whichever is higher. Accepted Deposit Forms include:

• Cash holdings
• Government-issued securities
• Other approved financial instruments

 

Additional capital or liquidity requirements may be imposed, depending on the business’s risk exposure, operational complexity, and size.

 

Local Staffing and Operational Presence

Virtual asset businesses operating from outside SVG are required to appoint a Principal Representative who is ordinarily resident in SVG. Responsibilities of the Principal Representative include:

• Overseeing daily operations in the jurisdiction
• Acting as liaison between clients, affiliates, and the Regulator
• Submitting regulatory filings and updates
• Advising on compliance matters and responding to official inquiries

 

Staffing and Technology Expectations include:

• Adequately trained and experienced staff
• Technology infrastructure that supports operational integrity
• Security protocols that protect client data and ensure confidentiality
• All staff must also meet fit and proper standards.

 

Additional Compliance Obligations

Beyond licensing and staffing, SVG’s regulatory framework outlines several other critical compliance obligations including the following Registration Disclosures:

• Applicants must provide detailed information about the business, including:
• Corporate structure and business activities
• Details of directors and management
• Policies for AML/CFT, cybersecurity, and data protection
• Risk assessment frameworks and internal controls

 

Travel Rule and AML/CFT Compliance:

VASPs must:

• Record and retain information about transaction originators and beneficiaries
• Monitor for high-risk or non-compliant transactions
• Implement procedures aligned with international AML/CFT standards

 

Client Protection Measures that the regulator expects to see include:

• Clear systems for asset segregation
• Safeguards to ensure market integrity
• Complaint-handling mechanisms
• Ring-fencing of client assets to prevent misuse

 

Ongoing Reporting Obligations include:

• Quarterly operational reports
• Annual audited financial statements
• Risk management reviews and other reports as directed by the Regulator
• Proof of Insurance Coverage – Licensed businesses must maintain adequate insurance to cover liabilities that may arise from operational failures or omissions.

 

Transition Period for Existing Businesses

Businesses already operating in SVG before the regulatory framework becomes fully effective are allowed a limited grace period to comply. During this period:

 

• Operations may continue temporarily, subject to timely submission of a registration application
• If an application is rejected or withdrawn, operations must cease within a defined period
• The regulator may also order immediate cessation if necessary to protect public interest

 

Preparing for Compliance:

If you are an existing SVG Company involved in the provision of Virtual Asset services you will want/need to prioritize:

 

• Appointing a qualified Principal Representative based in SVG
• Engaging a certified external auditor for ongoing compliance
• Reviewing capital adequacy and preparing the statutory deposit
• Compiling fit and proper documentation for all key personnel
• Implementing AML/CFT, cybersecurity, and data protection policies
• Establishing internal controls for risk management and client asset protection

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

The Mauritius Foundation is governed by the Mauritius Foundations Act 2012 and is administered and regulated by the Mauritius Registrar of Companies (ROC), described in the legislations as the Registrar of Foundations.

 

Key features of Mauritius Foundations:

• A Foundation is the dedication of property to an entity to be used for a specific purpose. To create a Foundation, ownership of the relevant asset is transferred to the Foundation by the founder(s) to achieve a specific purpose or purposes
• The Foundation could be set-up intervivos (by charter) or by will, could be set-up to benefit persons, or a class of persons or to carry out a purpose which may be charitable, non-charitable or both.
• A Mauritius Foundation has to be managed by a Foundation Council which should comprise of at least one member ordinarily resident in Mauritius and would require a secretary and have its registered office in Mauritius
• When a Foundation is registered, it would have separate legal personality and would need to keep proper books of accounts and keep its records in Mauritius at its registered office.
• Where the founder and all the beneficiaries of a Mauritius Foundation are non-resident (or if the Foundation is set-up for a purpose and that purpose is being carried out of Mauritius) the Foundation would be exempt from tax in Mauritius.

 

Name
The proposed name of a Mauritius Foundation must end with the word “Foundation” and must not include the words limited, company, partnership, societe or any abbreviations or translations thereof.

 

Charter
The main constitutional document of a Foundation is its Charter. The Charter of a Mauritius Foundation must contain inter alia:

• The name of the Foundation
• The name and address of the Founder(s) including an address in Mauritius for service of documents
• The object for which the Foundation has been established
• The initial assets of the Foundation, its purpose if applicable
• Details of the beneficiaries or the manner in which the beneficiaries may be appointed or removed
• Period of establishment
• Details of its secretary
• The Foundation’s registered office

 

The Charter shall be in writing and signed by the Founder or in case of a body corporate, by a representative of the Founder. Most Foundation jurisdictions today, require the charter to be filed and registered.

 

Objects of a Foundation
The objects of a Mauritius Foundation:

• May be charitable, non-charitable or both
• May be to benefit a person or a class of persons, or to carry out a specified purpose, or both
• Are according to the provisions of its charter
• Shall be valid and enforceable except where contrary to the laws of Mauritius

 

Foundation Council
Every Mauritius Foundation shall have a Council which shall administer the property and carry out the objects and purposes of the Foundation.

 

A Foundation must have a board of Councillors to manage the business and affairs of the Foundation. The Council shall consist of one or more persons (either legal/ body corporates or natural persons) known as a Councillor(s). A Council shall have at least one member who shall be resident in Mauritius. It may also be responsible for appointing new beneficiaries and determining the extent and nature of beneficial rights.

 

Generally, the Founder has a fair amount of flexibility to tailor the degree of responsibility of the Council to his/her needs by establishing its duties in the Charter.

 

Beneficiaries
A Mauritius Foundation can have one or more individuals as “beneficiary”.

 

A beneficiary means a person who is entitled to benefit under a Foundation; or in whose favour a power to distribute any Foundation property may be exercised.

 

However, in contrast to shareholders of a company or the beneficiaries of a trust, foundation beneficiaries have no legal or beneficial interest in foundation assets. That is, Foundation assets do not become the assets of a beneficiary unless distributed to the beneficiary in accordance with the Foundation’s charter or regulations.

 

Protector
It is permissible for a Mauritius Foundation to appoint a protector or committee of protectors in accordance with and having such powers, duties, functions and remuneration as may be specified in the charter.

 

The charter shall also mention the relationship of protector or committee of protectors with the Council whilst in office.

 

Property of Foundation
Assets transferred to or otherwise vested in a Mauritius Foundation shall -

• be the assets of the Foundation with full legal and beneficial title
• cease to be the assets of the founder or founders, once transferred to or otherwise vested in the Foundation by or on behalf of the founder or founders; and
• in the case of a Foundation with one or more beneficiaries, not become the assets of a beneficiary unless distributed to such beneficiary in accordance with the charter or regulations and the Act.

 

Registration of Mauritius Foundations
The Foundation’s Mauritius registered agent shall submit particulars extracted from the charter, accompanied by the registration fee set out (i.e. MUR 9,000 = USD 300) to the Registrar who shall retain and register it, if it is satisfied that all the requirements of the Act have been complied with and its objects are lawful. The Registrar shall allocate a registration number to the Foundation and issue a certificate of registration.

 

Annual Renewal Fees
The annual registration fee shall be due and payable not later than 20 January every year so long as the Foundation remains registered with the Registrar.

 

Secretary
Every Foundation shall have a secretary appointed by the Founder, with the Secretary being either a Management Company or who shall be such other person resident in Mauritius as may be authorised by the Commission.

 

Registered Office
A Mauritius Foundation must have a registered office situated in Mauritius to which all communications and notices shall be addressed.

 

Accounts
A Mauritius Foundation is required to keep proper books of account and records at its registered office. The books of account shall not be open to public inspection but shall at all times be open to inspection by the councillors, the founder, any supervisory person or the auditor of the Foundation.

 

The books of account should reflect the financial position of the Foundation, with respect to:

• all sums of money received, expended and distributed by the Foundation and the matters in respect of which the receipt, expenditure and distribution takes place
• all sales and purchases made by the Foundation
• the assets and liabilities of the Foundation

 

Register
Each Mauritius Foundation has to keep, at its registered office, a register of its councillors, any founder and any person who may have endowed assets to the Foundation as well as records and copy of documents filed with the Registrar and the minutes of proceedings of any meeting of the Council.

 

Tax exemptions and concessions
A Foundation of which the founder is a non-resident or which holds a Category 1 Global Business Licence under the Financial Services Act; and all the beneficiaries appointed under the terms of a charter or a will are, throughout an income year, non-resident or hold a Category 1 Global Business Licence under the Financial Services Act, shall be exempt from income tax in respect of that year.

 

For the purpose of the exemption specified above, any Foundation which qualifies shall deposit a declaration of non-residence for any income year with the Director-General within 3 months from the expiry of the income year.

 

Any distribution to a beneficiary of a Foundation shall be considered to be a dividend to the beneficiary.

 

Potential uses of a Mauritius Foundation
A Mauritius Foundation can be used for:

• Accumulation & Preservation of Wealth
• Succession planning
• Asset Protection
• Tax Planning
• Off balance sheet transactions
• Corporate finance/ asset financing
• Securitization

 

A Mauritius Foundation could also potentially be deployed as a DAO Legal Wrapper.

 

A Mauritius Foundation cannot be used to engage directly in commercial activities. However, only a charitable Foundation, under certain circumstances, may be subject to supervision by the Board of Investment.

 

Commercial activities may only be undertaken when they serve to achieve a Foundation’s non-commercial purpose or where the type and scope of the investments being held require such activity to be undertaken.

 

Foundations vs Trusts

 

• A Foundation is an independent legal person whereas a Trust is not
• A Private Foundation has to be registered or recorded (usually publicly) which is not always an obligation with a Trust.
• Assets may be held by a Foundation unlike a Trust where the assets are held by the Trustee on trust.
• Foundations generally cannot engage directly in commercial operations whereas Trusts may be used for certain commercial purposes.
• Sham issues are less likely to occur with a Foundation because of its corporate personality.
• In so far as taxation is concerned a Foundation is an entity and hence will be directly taxed where appropriate. No problem as with a Trustee accidentally becoming resident in a high taxing country.
• A Foundation will own assets in its own name which may bring comfort to the Settlor/ Founder
• The duration of a Foundation is infinite whereas many Trust jurisdictions have perpetuity periods.

 

PRICING

 

Set up price: $US2,400 (+ $400 if a Nominee Founder is required + $US800 if a Nominee Councilor is required)

 

Annual renewal fee from 2nd year: USD$2,400 (+ Nominees as/if required)

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

As has been discussed in previous Articles, these days most “Offshore” Jurisdictions have passed VASP laws – meaning if you intend to market and or manufacture a “Virtual Asset” via a Company formed in such a jurisdiction – you’ll need to apply for a Virtual Asset Service Provider (“VASP”) License. (The definition of “Virtual Asset” in most jurisdictions typically includes a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies).

 

As has also been noted in previous articles, if you do intend to market and or manufacture Virtual Assets, in essence, there are only 3 “Offshore” jurisdictions where you could potentially incorporate such a business ie:

 

• Panama: https://offshoreincorporate.com/panama-offshore-companies/ ;or
• Samoa: https://offshoreincorporate.com/samoa-international-business-companies/ ;or
• St Vincent: https://offshoreincorporate.com/saint-vincent-and-the-grenadines-svg-companies/

 

First up let’s be clear – the question of where to incorporate (and how to structure) your Offshore Company is a commercial decision for you and you alone to decide… You’ll need to do your due Diligence ie you need to identify the potential jurisdictions then you need to drill down and do you’re research as regards the features/pros/cons of each jurisdiction so you can then make an informed choice about where/how to set up.

 

We wouldn’t recommend incorporating in St Vincent because they have passed a VASP Bill and its only a matter of time before they develop the infrastructure needed to implement a VASP License regime.

 

So if you want to incorporate a VASP style business tax free Offshore – without having to apply for a VASP style License – that leaves a choice, in effect, between Samoa and Panama.

 

On the face of it Samoa would be easier to set up – their KYC requirements are fairly straight forward (eg no references required) and the set up time is minimal (once we’ve received all your docs via email we can usually set up a Samoa Company within 2-3 days, whereas in Panama it takes 2-3 weeks). Additionally, a Samoa Company would be simpler to manage in that it has lower level Account keeping requirements (Check this Link for details: https://www.dropbox.com/scl/fi/pho952fth2hfnm2qbhrcv/SAMOA-COMPANIES-ACCOUNTING-RECORDS-REQUIREMENTS.docx?rlkey=avrp7eynz7hydtku5mav5o022&st=asnrg1pg&dl=0 )

 

(You can also view Panama’s Account keeping requirements at/via this Link: https://www.dropbox.com/scl/fi/moue9nhqnf68ciipsq3ix/Panama-Entities-Account-Keeping-Requirements.docx?rlkey=6vxcvzmsh7hy3uoe96pv4cjz7&st=edcbrrlg&dl=0 )

 

The downsides of Samoa are (a) its theoretically possible that later on down the track the Samoan Authorities could decide to pass VASP Legislation (there’s no risk of that in Panama as the govt has already tried and the law was declared unconstitutional). + (b) almost certainly when you apply for a bank account for your Company you are going to need to produce to the bank a legal opinion confirming that your Company doesn’t require a Special License in its country of incorporation. This will be hard to get in Samoa (the legal profession there is rather unsophisticated) and will be much easier to get in Panama…

 

In terms of the challenge of getting a bank account opened one doubts it will make much difference whether you’re incorporated in Samoa or Panama. It may be slightly easier to get an account opened for a Samoa Company as its doesn’t have much (if any) negative history as a jurisdiction (it hasn’t had a “Panama Papers” style reveal. As yet). The upside of Panama is it’s very much a first world country in terms of infrastructure – it’s a financial powerhouse (the “Big 4″ Accounting firms have offices there, there are plenty of “high level” law firms, + lots of Banks & Fund Managers etc that you don’t have in Samoa…)

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.