June | 2025 | Offshore Companies International

How To Run an AI Consulting Business Tax Free From Offshore

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

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

How To Set Up a Paraplanning Business Tax Free Offshore

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

ST VINCENT & THE GRENADINES VASP REGULATIONS

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: