Where To Set Up An ICO Without Needing To Apply For a License

Last week we were contacted by an Accountant referrer who had a client with a specific aim…. The client wanted to launch a new Cryptocurrency/ICO in a low regulation jurisdiction where such a business could be incorporated without needing to apply for a Special License.


So, our In-House lawyer reached out to his/our Lawyer contacts in each of the nil tax jurisdictions whereat we normally form Companies.


The question put to each Lawyer/firm was “I have a new client wanting to launch a new Crypto coin/ICO. I have viewed the Business Plan. In my opinion what the client plans to offer does NOT constitute a Security. Is such a business a licensesable activity or a prohibited activity in your jurisdiction?”


Here are the responses we received:


BVI: “We recommend that companies that are venturing into Crypto activities should seek legal advice from a BVI attorney.  Crypto activities may fall under the Securities and investment Business Act therefore, the company should seek legal advice before proceeding. Please confirm if we should obtain a quote and we will need a copy of the business plan to obtain a quote.”


Panama: “Such a business is neither licenseable nor prohibited in Panama”


Seychelles: Such a business is now licenseable in Seychelles


Anguilla: No reply


Samoa: Such a business is prohibited in Samoa


Dominica: “The type of activity you are referring to is not restricted by the IBC Act of 1996 and as amended thereafter. Nevertheless, crypto activity is a grey area in our jurisdiction, thus it lacks proper protocols and regulations. If a legal opinion on this company is needed from a Dominica lawyer, the rates start with 3,000 USD, depending on the content.”


Belize: This activity is not regulated but neither is it prohibited.


Nevis: “On the application form, there is a section that asks about the purpose of the business. Representatives from the Registry will come and inspect our files. Since there is no legislation it is not illegal but I am not certain how the manufacturing of token will be viewed, since it will used as a form or currency. Let me look into this some more and revert back to you.”


Hong Kong: To my best understanding, there’s no official black and white guideline online to specify whether cryptocurrency or ICO is regulated or prohibited in Hong Kong. However, the SFC have published a statement in 2017 about ICO which you can take a look at: https://www.sfc.hk/web/EN/news-and-announcements/policy-statements-and-announcements/statement-on-initial-coin-offerings.html About licensing in SFC, please go to: https://www.sfc.hk/web/EN/regulatory-functions/intermediaries/licensing/do-you-need-a-licence-or-registration.html Unfortunately we do not deal with clients who are running cryptocurrencies platform or launching ICO, because these are considered as higher risk activities which requires us to conduct enhance and frequent ongoing due diligence so given the fees we charged, we would rather leave it to other expertise (i.e. big law firms) to on board this segment of clients. “


In short if you are looking to launch a new ICO/Cryptocurrency and you don’t want to have to apply for any form of Special license as things currently stand (Note: This information is current as at 8 August 2020) the jurisdictions you’ll definitely want to take a close look at are Panama, Belize and Dominica. OCI can assist you to incorporate a (nil tax) Company in these jurisdictions. Check these links for details:


  1. Panama: https://offshoreincorporate.com/panama-offshore-companies/
  2. Belize: https://offshoreincorporate.com/belize-offshore-companies/
  3. Dominica: https://offshoreincorporate.com/dominica-offshore-companies/


Before committing to incorporate such a business we’d recommend you seek legal advice from a Lawyer on the ground in the jurisdiction wherein you intend/decide to incorporate.


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How To Import Medical Supplies Tax Free Using an Offshore Company

The sudden arrival of Covid 19 has seen many countries experience on the ground shortages of necessary medical supplies + facilities needed to test potential victims and treat the infected.


Items in high demand include disinfectants, materials needed to expand/construct healthcare facilities designed to treat Covid patients, standard examination supplies, ventilators, and diagnostic equipment.


Serious business opportunities abound for anyone who is able to source these products/materials abroad and import them to an on the ground Distributor or bulk buyer.


If you are able to source these goods from a Supplier one country (eg China) and sell them to a Customer/or distributor in need in a 2nd country (eg the USA or Europe or South America) and you live in a 3rd country you’ll be pleased to know that you can benefit from incorporating your business Offshore.


Here’s how it will work:


  • A nil tax offshore company (commonly an International Business Company ie “IBC”) is incorporated in a country that does not tax income earned/sourced outside of the home country (let’s say the Company is called “ABC Imports Limited”)
  • ABC sets up an Offshore bank account, in a nil tax banking centre, which receives customer payments (including ultimately those made via a merchant account)
  • Ideally the website and server are hosted/located in a country which does not tax business on the basis of server location (eg Singapore, Iceland etc)
  • Customers contract with and pay ABC. The contract is formed Offshore, ie in a nil tax jurisdiction (see below re how that is achieved). All sales monies are banked free of tax in the first instance
  • ABC pays the manufacturer for the goods. The manufacturer ships (or couriers or posts or airmails) the product or goods direct to ABC’s customer
  • ABC is seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is achieved via the appointment of a (nil tax jurisdiction based) “Nominee” director.
  • Your standard sale agreement/website terms and conditions should provide (a) that a contract is not formed until the customer’s offer is accepted by you (ie the Offshore Company) and (b) that the source of the income is the contract. (If the order come in via website, 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)
  • Acceptance of the buyer’s offer would be provided by the Company (which is seen to be managed from “Offshore” via a nil-tax-jurisdiction resident Nominee Director) sending an email or text to the buyer, after he/she has placed the order; In simple terms what that means is that the situs of the Contract ie the place where the contract of sale (ie the agreement between your Company and the Buyer for your Company to supply goods in consideration of the buyer paying), at law, is formed in the director’s location ie a nil tax environment…
  • 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)
  • (If you are not a web-based business any all supply and sale contracts should be signed Offshore by the Nominee Director)
  • In the case of a web-based business (for additional legal certainty) ideally the Company’s Board of Directors should meet once a month and ratify all contracts entered into in the previous month
  • (If you need a regular income) You would invoice ABC 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/tax deductions to write off against this income (eg home office, equipment, travel, phone/internet/utilities etc) which would reduce the amount of your taxable income ie it should significantly reduce the amount of tax payable on this income (Assessable income less Allowable deductions = Taxable income). Alternatively, your Tax Free Offshore Company could loan you money (a loan is not taxable) or buy your investments direct (which would avoid the Company having to pay you “income” which would have tax consequences)
  • Ideally once you start to grow your business 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 model).


The other possibility is you could simply act as a Commission Agent for the Manufacturer of the Medical Supplies. Such an operation also lends itself well to an Offshore Corporate Structuring Plan. See below which explains how.


You could also use your local Company on the ground to act as a Distributor/Importer. Check this link for details of how that would work: https://offshoreincorporate.com/how-to-use-an-ibc-for-international-trade-import-and-export/


As mentioned above, in order to minimize the chances of your Tax Free Offshore Company (“IBC”) being taxed onshore, ideally, the IBC should/would be (and be seen to be) managed and controlled from Offshore. How this can be achieved is by including a Nominee Director as part of the Corporate structure. For details of how that can work click on these links:






How To Use an IBC To Act as a Commission Agent or Broker 


Acting as a Commission Agent or Deal Broker is a line of business which lends itself well to an Offshore Corporate Structuring Plan.


In this model structure (ie as set out below) it’s assumed that you will be acting as a middleman between a buyer and seller and if the buyer and seller do business you get paid a commission ie typically a percentage of the sale/deal proceeds.


To summarise how it would work is:


  • You set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a tax haven based Nominee Director
  • You are appointed as the IBC’s Authorised Representative
  • On behalf of the IBC you negotiate terms with the Seller and or Buyer to pay your IBC a Commission if/when the Buyer and Seller do business
  • The Commission Agent/Broker agreement/contract is signed Offshore by the Nominee Director
  • The source of the income is the contract.
  • Because the contract was signed offshore in a nil tax environment there should be no tax payable on income generated by the contract (a) where the Company is incorporated and (b) where you live (assuming you structure and administer the Company in a particular way).
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
  • That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home). More sizeable amounts could be accessed by way of loan or a 2nd Offshore Company could be formed to buy your onshore investments
  • If you don’t want the authorities to know how much money you are earning eg by way of wages you could convert your hard currency into Bitcoin and/ or you could use an anonymous ATM or Debit/VISA card to withdraw $ from an Auto Tele Machine (though technically that receipt would be assessable income for local tax purposes)


The majority of trading profits would be banked and or reinvested Offshore potentially tax free.


In either structuring scenario, ideally – so 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 could get you around what might otherwise be a substantial tax or legal liability eg imprisonment for tax evasion) you will want 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).


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 online/sales earnings/commissions you should be able to bank, and or invest, Offshore in a nil tax environment.


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. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyer’s equivalent of climbing Mount Everest!).


Local laws can have an impact. Hence you should seek local Legal/Financial/Accountant’s advice before committing to incorporate such a business Offshore.


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