Company- Management | Offshore Companies International

HOW TO SET UP A TAX FREE PURPOSE FOUNDATION OFFSHORE

Any discussion about Charitable Purpose Foundations must necessarily begin with an examination of What is a Purpose Foundation?

A Purpose Foundation (like its forerunner the Purpose Trust) is one set up, not to benefit specific natural persons or corporate entities, but rather to raise funds for a ( and/or to carry out some form of) specific (usually Philanthropic or Charitable) Purpose.

Historically any Purpose Trust or Foundation set up to achieve a Purpose other than a Charitable Purpose has been held by the Common Law Courts to be unenforceable.

However, of late, some jurisdictions have passed laws specifically allowing for the establishment of a Foundation which is established to carry on a specific Purpose, Charitable or otherwise.

An example of a non-charitable purpose Foundation would include a Foundation which is established to maintain the Founder’s collection of antique automobiles, or perhaps one for the purpose of constructing a home for the maintenance and care of his/her cats and dogs and all their offspring.

In the Common Law world a Trust (ie the forerunner and close cousin of the Foundation) must have beneficiaries whose identity can be established with certainty. If the identity, or method of determination, of the ultimate beneficiaries of a Trust is so vague that neither the Trustee nor a Court could readily determine whether any given individual at any time was or was not a beneficiary, the Trust would be unenforceable under Common Law and therefore, invalid, unless, of course, its purpose was charitable.

Historically, a Charitable Trust, although it may have no named beneficiaries, could be enforced by the local Attorney General. In the foregoing examples, however, certainly neither the antique automobiles nor the cats and dogs could sue the Trustee to enforce the Trust, and none of them is capable of having a Personal Representative.

Interestingly one jurisdiction (ie Seychelles) has specifically catered in its Foundations Law for any attempt by a foreign Court to declare a (non-Charitable) Purpose Foundation invalid by including a provision in its law which says that “Notwithstanding a provision of a written law or of a written law of any other country, a Foundation, other than a Foundation with beneficiaries being beneficiaries in terms of section 59, shall be a Foundation established to carry on a specific Purpose”.

That being said, if your heart is set on establishing a Purpose Foundation – and your aim is to fly under the radar or to claim tax deductibility for any “donations” made to the Foundation – the wiser choice would be to establish your Foundation as a Charitable Purpose Foundation. Certainly such a Foundation would be far more likely to survive a legal a challenge compared with those which have historically been struck down as Non-Charitable Purpose Trusts in the Common Law Courts.

In a Charitable Purpose Foundation the objects of the Foundation must be set out in the Charter (that is the document which is publicly filed giving birth to the Foundation). Here is an example of such objects:

(a) To provide assistance and relief for children in ill-health;

(b) To raise funds for, and to financially assist, children in ill-health;

(c) To promote the health and well-being of children, including promotion of the provision of proper health care and treatment for children;

(d) To make distributions to non-U.S. entities and institutions that are organized and operated exclusively for charitable purposes and which further the purposes referred to in sub-paragraphs (a) to (c) above.

When used in combination with a Tax Free Offshore Company (ie where the Foundation is set up to hold the shares of the Company) a Purpose Foundation can assist you to do tax effective business abroad without having to declare yourself (or your family members) to be, at law, the underlying beneficial owners of your Offshore Company. This affords one unparalleled Tax Deferral and Asset Protection opportunities.

The down side of a Charitable Purpose Foundation is that, once registered, it can’t later morph into a Foundation with named/specific beneficiaries.

The law of your home state can impact on your reporting requirements. Hence it would be wise to seek local legal and tax advice before committing to establish a Purpose Foundation.

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

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Belize IBC Act Changes February 2019

A new IBC Regime came into force on 1st January 2019 in Belize.

Following several consultations with our legal advisors and some guidance received from the Belize International Financial Services Commission (“IFSC”) and the Belize Income Tax Department, we can now provide the following clarifications on the impact of the new regime on Belize IBCs.

Under the new IBC regime in Belize:

1. Belize IBCs can now:

Acquire real property or an interest in real property in Belize
Hold an interest in any Belize company, whether domestic or international
Conduct business with any Belize resident person
Open and operate a domestic bank account in local Belizean currency
Engage in direct investment and trade in Belize

2. IBCs that hold a license issued by the IFSC (e.g. Trading in Securities, Forex, Brokerage, etc.) are now required to establish a physical presence in Belize before the end of 2019;

3. IBCs that do not hold a license from IFSC may decide to be physically present in Belize;

4. IBCs that do decide to be physically present in Belize will consequently be deemed as persons resident for tax purposes in Belize;

5. IBCs that decide to remain outside of Belize and carry out their core income generating activities outside of Belize will not be deemed resident in Belize and will thus not be liable to taxes on income derived outside of Belize;

6. IBCs, whether physically present in Belize or not, may apply for a Certificate of Good Standing, subject to payment of registry renewal fees;

7. IBCs, physical presence and date of incorporation notwithstanding, may apply for a TIN and thus file annual tax returns along with unaudited financial statements subject to requirements 8 and 9 below;

8. Accounting records – this requirement has already been established with the Accounting Records Maintenance Act of 2013 and remains in effect. (ie a Belize IBC shall maintain accounting records and must keep a note in its registered office revealing a street address where those records are kept).

9. The Commissioner of Income Tax may require the following companies to be audited by an independent audit firm:

(a) IBCs with income of at least USD6m;

(b) Entities operating in a designated processing area in Belize with income of at least USD250,000;

Listed on a stock exchange;
Restructuring or liquidating or selling all assets via auction;
Regulated by the IFSC;
Preparing consolidated Financial Statements;

That the commissioner may direct to be audited and having regard to total revenues, assets and employees;

10. IBCs incorporated on or before 16th October 2017 remain tax exempt up to 30th June 2021 and can still obtain a Tax Exemption Certificate up to 30th June 2021;

11. Any IBC incorporated on or after 17th October 2017 that requires a Tax Exemption Certificate must give evidence that:

the IBC is not physically present in Belize;
the IBC’s core income generation activities are conducted in a country where taxes under the Income and Business Tax Act would become applicable had it been located in Belize; and
the IBC is paying the rate of taxes payable;

12. Each Belize IBC must keep at its registered office up-to-date registers of directors, shareholders and ultimate beneficial owners (duly signed by a director).

Tax Resident Companies

For IBCs that choose to be physically present in Belize or those that carry out a licensed activity, the following rules are applicable/relevant:

1. Belize has a territorial tax system;

2. The Belize Income and Business Tax Act Cap55 (IBTA) provides:

(a) A Tax exemption on income below USD37,500 per year;

(b) Interest on a bond and dividends paid or received by an IBC is tax exempt and free from withholding tax provided it is not paid or received in Belize by a tax resident;

(d) There is no capital gains tax in Belize;

(e) IBCs that are physically present and are resident in Belize for tax purposes: i. Must file monthly business tax returns;

ii. Income below USD37,500 is tax exempt;

iii. IBCs with income greater than USD37,500 per year will be subject to the payment of business tax every month as per the tax rates applicable to business type, this will count as a credit toward annual tax assessments. Business tax will be on gross receipts. Business tax rates range from 1.75% to 19%, depending on business type. E.g. Most business pay at 1.75% of business tax rate; professional services business pays 6%.

iv. Annual tax returns (annual assessments) 3% on net Income up to USD1.5m; 1.75% on Net Income greater than USD1.5m; tax payable in USD. This assessment is done yearly, before March 31, and requires completion of corporate tax return accompanied by an audit report.

3. General Sales Tax Act (GST): IBCs with income greater than USD37,500 per year will be required to register as a General Sales Tax Agent, and depending on income source, will be required to charge 12.5% GST on its sales to consumers in Belize and will also be able to nett of general sales tax paid on its purchases. The net amount of general sales tax is payable to the GST department on a monthly basis.

For the avoidance of doubt, an IBC is therefore only liable to taxes in Belize if it is a person resident in Belize. Furthermore, the IBTA was also amended to provide that, “…where a company is engaged in a trade, business, or profession where the revenue or income is derived outside Belize, the company shall not be liable for payment of income tax in Belize.”

Intellectual Property

A further update on the new IBC regime addresses intellectual property (IP) assets. Statutory Instrument No. 11 of 2019 came into force as of 1st January 2019 and essentially abolishes the IP regime. Key provisions to note include:

IBCs incorporated on or after 17th October 2017 are not allowed to acquire, hold, own or deal with any IP asset.
IBCs incorporated prior to the aforementioned date shall not acquire any new IP asset and are required to apply to the IFSC for approval to continue holding current IP assets up to 30th June 2021.
For IP assets, for each case, the company will have to send letter to IFSC to seek guidance. They may be required to establish physical presence, but only upon instruction from IFSC.

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

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How To Set Up a Franchised Based Business Offshore

Entrepreneurs whose business model involves developing then commercializing a Franchise Prototype model can benefit enormously from Offshore (tax free) Incorporation.

Typically how it works is you set up (i) a nil tax Master Franchise Company and (ii) a nil tax IP Holding Company Offshore. But more on that later, first up let’s look at the concept of a Franchise…

What is a Franchise?

A successful small business is typically one comprised of a series of demonstrable (usually documented) interconnected systems. Once formulated and documented/recorded these business systems can form the basis of a Franchise prototype. For someone looking to set up a small business it’s often though less risky to buy a Franchise because the systems have been successfully deployed already.

The most successful franchise-based business model is McDonalds Hamburgers.

McDonalds for example have written documented systems which explain, in fairly simple terms, to staff members:

How to greet a customer
How to put together a burger (ie stages of production and who does what)
How to make a coffee
How to pour an ice cream Sundae
How to cook chips
How to deal with a disgruntled customer
Etc etc etc

All these things are inventions of the mind ie Intellectual Property (“IP”).

In addition, Franchisees are given the inalienable right to be part of the McDonalds advertising/marketing system. The (successfully developed over many long years) know-how behind this marketing system (a unique commercial upper hand which sets McDonalds apart from its competitors) is at its heart also an invention of the mind ie IP.

Further the Franchisee also gets to use and benefit from the inimitable McDonalds (guaranteed to bring in customers of itself) Laughing Clown/Golden arches etc logos. These too are IP.

The Franchisor/Franchisee Relationship – Typical

In the above scenario the Franchisor typically supplies the Franchisee with 4 things:

A Manual which enables the Franchisee to run the business (using just teenager labor in McDonalds’s case), ie Intellectual Property (“IP”)
Exclusive Products (ie products with unique, well-known brand names such as “BigMac” & “Quarter Pounder” etc) which are guaranteed to bring in value ie attract customers, ie IP
An advertising/marketing program/system guaranteed to, at all times, bring customers through the Franchisee’s door, ie IP
The right to use the Franchisor’s Trademarks (these trademarks are also IP)

Usually what happens here is:

The IP is held by one Company. (The “IP” Company). This Company is usually based in a zero-tax jurisdiction
The IP Company provides an exclusive use License to a/the Master Franchise Company (which is usually also incorporated in a zero tax or low tax jurisdiction) providing the Master Franchise Company with the right to market/commercialize this IP
The Master Franchise Company (ie the “Franchisor”) sells a Franchise to a Franchisee and collects an up- front payment plus a percentage of profit or revenue moving forward. In return for these payments the Franchise owner (ie the Franchisee) is entitled to use the Franchisor’s IP
The payments made to the Master Franchise Company are usually received in a nil tax or low tax environment
In return for having the exclusive right to use/commercialize the IP the Master Franchisor Company pays royalties or license fees to the IP Company.

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

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Asset Managers – Trading Under a PoA – Why Do I Need a Contract?

Powers of Attorney are commonly used by Traders (eg Forex Traders) to trade funds for a third party to avoid having to apply for a Fund or Broker’s License.

How it works is:

(a) In the case of forex etc trading an account is opened in the name of the third party investor (“the Account Owner”);

(b) The Trader sets up a tax-free Offshore Company (“IBC”);

(c) The Account Owner (ie a third party investor referred to in a PoA as “the Principal”) signs a Power of Attorney with the Trader’s IBC which appoints at law the Trader’s IBC as the Account Owner’s Authorized Trader and attorney-in-fact (the “Agent”);

(d) The Trader trades the Account Owner’s account and charges a trading fee as agreed (which is commonly a percentage which could be anywhere from 20% to 50%);

(e) The Trading Fee is banked into the Trader’s IBC’s Bank Account free from tax

The Trader/Agent is given full power and authority on behalf of the Principal to buy, sell (including short sales) and trade in a range of things as specified in the PoA/Authority document including for example:

Currencies
Stocks
Mutual funds
Index funds and securities
Bonds
Options (including uncovered option writing)
Physical commodities
Financial instruments
Commodity futures contracts
Financial futures contracts
Equities and single-stock futures contracts
Foreign commodities
Foreign commodity futures contracts
Forward contracts
Contracts in unregulated foreign exchange markets, and options and other derivatives on each of the foregoing, on margin or otherwise,

If you are going to trade someone else’s money under a Power of Attorney, before a Power of Attorney gets signed, first and foremost, you will need to have a legal contract in place (ie signed by both you and the investor) which clearly sets out:

The services you are going to provide
How you are going to provide those services
That you are entitled to get paid for those services
What you are going to get paid for those services
How you are to receive payment
What out of pocket expenses you are entitled to be reimbursed for
When you are entitled to invoice/receive payment
That the client will provide you with a Power of Attorney
What the terms of the Power of Attorney will include
In what circumstances the contract can be cancelled by you
In what circumstances the contract can be cancelled by the investor
How the Power of Attorney can be revoked and by whom
Whether you can assign the benefit of the contract (and how you can assign the benefit of the contract)
Proper law forum (ie what Country’s courts are to hear the case if there is a legal dispute)
etc

OCI’s in house Lawyer can draw and settle this contract for you for a price of $1,000. Or you could retain an outside lawyer to do this for you.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Dropship Using a Tax Free Offshore Company

By “Dropshipping” we mean a business where the customer orders something either via email or directly via your website and you then arrange for the manufacturer to post or airmail or courier the item direct to the customer.

In principle here’s how dropshipping can/will work via a tax free Offshore Company :

A nil tax offshore company (commonly an International Business Company ie “IBC”) is incorporated (Let’s say the Company is called “IBC Trading Limited”)
IBC Trading Limited (hereinafter “IBC”) owns/operates the business (eg it owns the web-domain and the website/artworks or trademark/s or any sole distributor rights are held by or transferred to the IBC)
You post terms and conditions on your website and or in your order form that effectively say the client is buying from IBC and that the contract is concluded Offshore (ie in a nil tax environment).
The client submits his order via the website or via email
IBC 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)
Customers contract with and pay IBC. All such monies are banked free of tax in the first instance
IBC pays the manufacturer for the goods. The manufacturer ships (or couriers or posts or airmails) the product or goods direct to IBC’s customer
You or your local company would be contracted by IBC to manage sales/delivery of product/website maintenance/whatever.

10.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 expense against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income.

11.Often there is some kind of intellectual property (“IP”) created or behind the website based business (even if it’s just the website/design). It may be advantageous to you down the track if ownership of the business and the IP were held by 2 different entities. What you can do there is set up a 2^nd IBC to own the IP. The first IBC (ie the Trading Company) pays license fees periodically to the 2^nd IBC which fees would be receipted tax free. This could be advantageous if you wanted to bring ownership of the web-business onshore or if you wanted to sell the business but keep a passive (potentially tax free) income stream

12.Ideally once you start to grow, and to add substance, you would be wise to set up your MD/Board and or a sales team onshore to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc ie as per the Amazon/Google model)

To minimise the chances of the IBC being taxed onshore ideally the IBC should be (and be seen to be) managed and controlled from offshore. How this can be achieved is including a Nominee Director etc as part of the Corporate structure. See this page for details of how that can work:

http://offshoreincorporate.com/faq/should-i-engage-nominees-or-should-i-direct-and-hold-the-shares-in-my-offshore-company/

http://offshoreincorporate.com/faq/how-can-i-protect-my-underlying-ownership-of-my-offshore-company-where-a-nominee-is-engaged-to-act-as-director-or-shareholder/

To get around local CFC (“Controlled Foreign Corporation) laws and or prevent the existence of IBC’s bank Account coming to the attention of your local authorities you will also want/need to set up a Foundation to hold the shares of your tax free IBC/Offshore Company.

Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an Offshore Company for such purposes.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

SEYCHELLES IBC ACT CHANGES

This update summarizes recent amendments to the International Business Companies 2016 (the Act), which is the Seychelles legislation providing for international business companies (IBCs). The Act has been amended by the International Business Companies (Amendment) Act 2018, Act 12 of 2018 (the 30.11.2018 Amendments) effective 30 November 2018 and by the International Business Companies (Amendment) Act 2018, Act 15 of 2018 (the 1.1.2019 Amendments) effective 1 January 2019 (together the Amendments).

SUMMARY OF AMENDMENTS

1. Continuation of no public access to Registers of Directors filed with the Registrar

1.1 Section 152 of the Act (read with sections 352 and 390) has been amended to provide indefinitely for no public access to IBC Registers of Directors filed with the Registrar. Prior to the 30.11.2018 Amendments coming into force, no public access to filed Registers of Directors was only guaranteed until 30 November 2018.

1.2 The penalties for breach of the obligation to file a copy Register of Directors have been reduced to US$250 (from $500) and a daily penalty of $25 (instead of $50) for each day or part thereof during which the contravention continues.

2. Deemed dissolution date extended from 5 to 7 years after striking off

Section 275 of the Act has been amended to provide that an IBC struck off the Register is deemed to be dissolved after being struck off continuously for seven (instead of five) years.

3. Registrar to have wider powers to restore struck off companies

Section 276(1) of the Act was amended to extend the Registrar’s power to restore a company struck off the Register to all struck off companies except for those struck off under section 272(1)(a)(iii) or (iv) of the Act, being companies struck off for involvement in fraud or for jeopardizing the reputation of Seychelles as a financial centre. These wider restoration powers of the Registrar avoid the extra time and cost of an application to the Supreme Court of Seychelles for a restoration order.

4. Increasing restoration order application period from 10 to 12 years

Section 276(2)(a) of the Act was amended to permit an application to the Supreme Court of Seychelles for an order to restore to the Register a struck off or dissolved company to be made within twelve years (instead of ten years) of the date of the striking-off notice published in the Gazette.

5. IBCs become Seychelles tax resident but continue to pay no Seychelles tax on foreign sourced income

5.1 The ban on IBCs carrying on business in Seychelles has been removed. An IBC is now tax resident in Seychelles and no longer tax exempt. If an IBC carries on business in Seychelles it must pay Seychelles business tax. Significantly however, if an IBC only earns foreign sourced income, it is not liable for Seychelles tax on any of its income or profits. Seychelles has a territorial tax system such that a Seychelles tax resident is liable for Seychelles tax on Seychelles sourced income but not on foreign sourced income

5.2 While the 1.1.2019 Amendments were prompted to ensure that Seychelles meets the standards set by the Base Erosion and Profit Shifting Standards initiative of the Organisation of Economic Co-operation and Development, they strengthen Seychelles IBC attractiveness and have no adverse fiscal impact on IBCs that only earn foreign sourced income. Despite the removal of the former section 361 tax exemptions, an IBC that solely derives its income outside Seychelles is not liable for Seychelles tax on its foreign income. Under Seychelles’ territorial tax system, a tax resident is liable for Seychelles tax on Seychelles sourced income but not on foreign sourced income. Seychelles does not tax capital gains.

5.3 IBCs continue to be exempt from Seychelles stamp duty on instruments relating to: (i) the formation of a company; (ii) transfers of property to or by a company; (iii) transactions in respect of the shares, debt obligations or other securities of a company; (iv) the creation, variation or discharge of a charge or other security interests over any property of a company; and (v) other transactions relating to the business or assets of a company (section 362 of the Act), except that no stamp duty exemption applies to an instrument directly or indirectly relating to Seychelles immovable property (real estate).

5.4 The former prohibition against IBCs carrying on business in Seychelles has been removed (but see paragraph 5.6 below for business restrictions). However, if an IBC earns assessable income (income sourced from Seychelles) it is legally required to:

(a) within one month of deriving the first assessable income (income sourced from Seychelles), notify the Registrar in writing that it is deriving assessable income and the nature of the activities giving rise to such assessable income;

(b) within one year of deriving the first assessable income, submit to the Registrar an Annual Return accompanied by the documents to be annexed to the Annual Return as required under the Companies Act 1972, including annual audited financial statements;

5.5 Business Tax Act 2009 (BTA) has recently been amended by the Business Tax (Amendment) Act 2018, Act 14 of 2018 (BTA Amendment Act 2018). The following provisions of the BTA as amended by the BTA Amendment Act 2018 can be noted:

(a) “assessable income” only includes income derived from sources in Seychelles (sections 2 and 11 of the BTA);

(b) “non-taxable business income” means income not sourced in Seychelles and not included in the assessable income of a business (section 2 of the BTA);

(c) An amount derived by a resident person (including an IBC) in carrying on business is derived from sources in Seychelles if derived from activities conducted, goods situated or rights used in Seychelles, regardless of the residence of the parties participating in the transactions and regardless of the place where the agreements are executed (section 5(1) of the BTA);

(d) The remittance of an amount to a person outside Seychelles, out of non-taxable business income (see (b) above) is not subject to Seychelles tax (section 5(4)(a) of the BTA); and

(e) Whereas section 8(1) of the BTA provides for business tax (withholding tax) on certain payments by a resident person (including dividends, interest and royalties) to non-resident persons, section 8(4) of the BTA provides that subsection (1) shall not apply if dividends, interest, royalties or other payments are made by a resident person from income that is not sourced in Seychelles.

5.6 While an IBC may carry on business in Seychelles and earn Seychelles-sourced income (subject to the above-mentioned reporting and taxpaying obligations), pursuant to section 5(2) of the Act an IBC continues to be prohibited from:

(a) carrying on banking business as defined in the Financial Institutions Act 2004 in or outside Seychelles;

(b) carrying on insurance business as defined in the Insurance Act 2008 in Seychelles or, unless it is licensed or otherwise legally able to do so under the laws of the country in which it carries on such business, outside Seychelles;

(c) carrying on business providing international corporate services, international trustee services or foundation services as defined in the International Corporate Service Providers Act 2003 except:

(i) to the extent permitted under the International Corporate Service Providers Act 2003; and

(ii) in the case of carrying on such business outside Seychelles, if the company is licensed or otherwise legally able to do so under the laws of each country outside Seychelles in which it carries on such business;

(d) carrying on securities business as defined in the Securities Act 2007 in Seychelles or, unless it is licensed or otherwise legally able to do so under the laws of the country in which it carries on such business, outside Seychelles;

(e) carrying on business as a mutual fund as defined in the Mutual Fund and Hedge Fund Act 2008 unless it is licensed or otherwise legally able to do so under the Mutual Fund and Hedge Fund Act 2008 or under the laws of a recognized jurisdiction as defined in the Mutual Fund and Hedge Fund Act 2008; or

(f) carrying on gambling business as defined in the Seychelles Gambling Act 2014, including interactive gambling business, in or outside Seychelles unless it is licensed or otherwise legally able to do so under the laws of the country in which it carries on such business.

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

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How To Set Up a Tax Free Offshore Service Company

There are in essence 2 categories of client that we typically assist to Incorporate Offshore:

Clients who buy and or sell outside their country of residence
Enterprises where goods and or services are sold online (eg an Ecommerce store) or income is otherwise generated online (ie Online Trading, eg Cryptocurrency Trading, Online Forex/Shares/Futures/Commodities/Metals/Options etc Trading)

If you don’t fall into these categories an option for you might be to set up a tax-free Offshore Service Company.

There are 2 possibilities here:

(a) If your business can justify why the business would want to outsource the provision of products or services to an overseas supplier; and/or

(b) If your business is heavily dependent on deployment of Intellectual Property which might include Trademarks, IT/software or Operating systems (eg a Franchise model). In this case you could set up a nil tax Offshore Company to own the IP/business operating systems.

In either case how it could/would work is:

You set up a tax-free Offshore company (“IBC”)
You have the IBC (i) enter in to an agreement/contract with your local Company/Business to supply services in return for payment or (ii) have the IBC enter into a Licensing agreement whereby the IBC agrees to supply certain IP in return for regular fees (ie licensing fees or royalty payments)
Once the contract is signed the local Company/business sends money to the IBC regularly (these payments should be tax deductible to the local Company/business)
These payments are banked by the IBC potentially tax free

Of course, ideally – where a service contract is signed – you’ll want to be able to show that the Offshore Company has actually delivered some services. Particularly where such services are capable of being delivered online, this shouldn’t be hard to do.

To maximize the chances of this working and surviving the blow torch if applied:

(a) The tax-free Offshore Company should be seen to be managed and controlled from Offshore; and

(b) You can’t afford to be classified at law as the owner, or beneficial owner, of the tax-free Offshore Company.

You should be able to adequately deal with (a) by deploying a (nil tax resident) “Nominee” Director as part of the Corporate structure; &

To cater for (b) you’ll want/need to set up a Private Foundation to hold the shares of the Offshore Company.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Apply For a Nevis Money Services License

If you’re in the Money Services Business (eg payment processing or currency exchange) and you’re looking for a private, low red tape, low tax place to incorporate Offshore then you’ll be pleased to hear that Nevis now offers a license regime for Money Services Businesses.

In Nevis a Money Services Business License can be issued to a business which plans to provide as a primary service any of the following services:

transmission of money or monetary value in any form;
cheque cashing;
currency exchange;
the issuance, sale and redemption of payment instruments;
any other services the Minister may specify by notice published in the gazette; or the business of operating as an agent or franchise holder.

Key Features – Overview

The several classes of licence issued under the Money Services Act, No. 26 of 2008, shall authorize the holders to carry on money services business as specified:-

Class A licence permits the holder to carry on the transmission of money or monetary value in any form, the issuance, sale or redemption of money orders or traveller’s cheques, cheque cashing and currency exchange.
Class B licence permits the holder to carry on the issuance, sale or redemption of money orders or traveller’s cheques, cheque cashing and currency exchange.
Class C licence permits the holder to carry on cheque cashing.
Class D licence permits the holder to carry on currency exchange.
Class E licence permits the holder to carry on pay day advances.

Where different places of business are kept in the name of the same legal person, a separate licence is required for each such place of business.

Legal Requirements

Requirement	Description
General
Corporate vehicle permitted	Nevis International Company
License application fee	USD 2,000 (Class A to E)
Annual license fee	USD 10,000 (Class A to E)
Local physical office required	No
Share capital or equivalent
Minimum paid up capital	None
Directors
Minimum number	2
Corporate directorship allowed	No
Local director required	No
Shareholders
Minimum number	2
Corporate shareholder allowed	Yes
Local shareholder required	No
Service Providers Required
Company secretary	Yes
Auditor	Yes
Legal adviser	Yes

Tax Treatment

Corporate income tax is only payable for locally generated profit, transactions made solely to non-resident entities is not subject to tax.

Duration to Set Up

Minimum 3 maximum 6 months

Distinctive Benefits of Licence

Numerous tax advantages
Ease and speed of licensing

Licensing Procedure

In order to obtain a licence as a money services business, you must apply, via your Nevis Agent, in writing to the Financial Services Regulatory Commission, pay the prescribed application fee, complete Form A and Form B as outlined in Schedule 2 of the Money Services Business Act of 2008 and submit the required documents. (Contact Us if you wish to view/receive a copy of the said Act &/or the Application form provided for by the Act).

The Nevis Financial Services Regulatory Commission will process the application in accordance with its application processing procedures. Upon completion of this process, if it is satisfied that an application is in order and the applicant is a fit and proper person to be licensed to conduct money services business, the Financial Services Regulatory Commission will approve the application and issue a licence to the applicant subject to the applicant paying the prescribed licence fee and making the prescribed statutory deposit in accordance with the Money Services Business Act.

It is anticipated that every sponsor will arrange for a delegation of its senior officers, or, in the case of an independent institution, of its principal controllers, to make a presentation in respect of the applicant and its proposed business before a formal application is submitted.

The cost to apply for us to asset you to apply for such a license would be between $US12,000 and $20,000 depending largely on how much of the heavy lifting can be done your side.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Obtain a Belize International Money Lender’s License

As a result of the GFC and resulting consumer lending fallout, US Legislators decided to clamp down on 2^nd tier lenders (and, in particular lenders of last resort such as pay day lenders).

When this happened the progressive International Offshore Financial Centre of Belize saw a business opportunity. The idea morphed into a plan which became Legislation. In short the Belize Offshore Industry Regulators had the foresight to realize that such a business model was never going to go away, that in particular US based business owners would be looking for a new domicile, that IBCs were likely to be used for such purposes and better they offer a Licensing regime to bring such businesses out into the open and thus attract the more serious players.

The legislation ie the INTERNATIONAL MONEY LENDING (SHORT TERM & UNSECURED SMALL LOANS) REGULATIONS, 2008 (a copy of which can be downloaded from this site: https://www.ifsc.gov.bz/legislation/ ) provides that:

A regulated entity may make loans of not more than $5,000 per loan
The loan cannot be secured against real estate, motor vehicles or “other tangible personal property”
The loan must have an initial repayment period of not more than 1 year
Such loans must be for household purposes and personal expenses only
Loans can only be made to “consumers”

There are also provisions regarding pre-contractual disclosures. In particular in the Lenders website (or in the loan contract) it must be stated:

That the loan is designed as a short term cash flow solution & not as a solution for long term financial needs
Additional fees may accrue if the loan is refinanced

Other features include:

(i) A provision specifically providing that Belize law shall govern the loan regardless of where the Borrower is located

(ii) The identity of the borrower must be proven

(iii) The lender must satisfy the Regulator that at least 2 of its Management Level staff/team members have short term personal lending industry experience

(iv) The Lender must keep in Belize books & records relating to the loans (in hard or soft form)

(v) Not less than 70% of duties & activities relating to the Lenders business must be seen to be carried out from inside Belize (though these can be outsourced)

A Belize international money lending license requires you to form a Belize Company with paid up capital of not less than $US75,000. This amount can be increased by the BeIize FSC depending on your style of business model and your commercial/career background.

PROCEDURES TO FOLLOW WHEN APPLYING FOR A LICENSE FROM THE IFSC BELIZE:-

Company name:

We will check if the desired name is available and reserve the name. The IBC Registry allows us to reserve the name for 10 days free of charge. Thereafter, we can reserve the name for 90 additional days at a cost of $30. (NOTE – it may take up to one week for the IFSC to give an answer).

Company Incorporation:

(i) Authorized Share Capital.

The authorized share capital depends on the what type of license is desired. For this type of Company the authorized share capital must be not less than $75,000.

(ii) IBC Registry fees

The incorporation fee and annual renewal fee charged by the IBC registry (which is separate from IFSC fees) for a company with $US75k authorised capital is $1,000. The annual renewal payable to the IBC Registry is due January 1 every year, but we usually pay during the month of December before the due date.

(iii) Bearer shares strictly prohibited

All shares must be registered shares. Bearer shares are not permitted. The Memorandum and Articles of Association of the company must state that bearer shares are strictly prohibited.

(iv) Shareholders and directors

A shareholder may be a corporate entity, such as a company from another jurisdiction. However, that company must have physical persons as shareholders and directors. Any additional corporate layers are not allowed.

The company is required to have at least one director. (Trading in Securities and Foreign Exchange Services applicants are required to have two directors, one of which must be a resident of Belize.)

Bank Account

It is a requirement that every license holder keep a capital deposit in a bank in Belize as prescribed by the regulations. For example, a company that holds an International Money Lenders License is required to keep an unencumbered capital deposit of $75,000 in a bank in Belize.

After the bank receives the application form and other required documents, it takes two weeks for the bank to give its initial review. After we’ve addressed any issues raised in the review, it typically takes another two weeks for the account to be approved or declined.

Customer Due Diligence (CDD) requirement (for each beneficial owner/shareholder, director, officer and signatory):

Photo Identification - Notarized color copy of passport. Only the pages that show identification information, photograph and signature are required.
References – An original reference letter is required as regards the beneficial owners/shareholders, directors, and signatories to the account. The reference letter should be from a bank (preferred), a practicing attorney or a licensed accountant. References should be recent (not older than three months), prepared with official letterhead, and should indicate the following:

(a) a period of relationship for at least (2) years;

(b) type of relationship conducted;

(d) clear contact details of the person who signs the letter.

(e) Confirmation of Address – A utility bill issued within the past three months with complete residential address. A P.O. Box address is not accepted.

Note, where documents are issued in any language other than English, they must be translated to English by a certified translator.

IFSC application

The application package must contain the following:

The application form properly completed and certified, along with the non-refundable application fee of $1,000. The application form must be signed by a director or a shareholder/beneficial owner and the signature must be notarized.
Certified biographical affidavit of beneficial owner, director/s, and signatories to the bank account. Also required is the certified biographical affidavit of the management of the company. In the case of corporate entities, the beneficial owners, directors and beneficial owners of that entity must also submit certified biographical affidavits.
Know Your Client (KYC) documentation including:

i. Proof of ID (Notarized passport – same as bank CDD requirement)

ii. Proof of address (notarized recent utility bill)

iii. Curriculum Vitae – showing education and work experience

iv. Professional reference – from a lawyer or certified accountant (similar to the reference required for the bank account application)

v. Bank reference and bank statement (the bank reference must be from a bank where the individual has done business for more than two years.)

vi. World Check report – (we will provide this report)

Business Plan – Detailed business plan including a three-year financial projection, together with diagram illustrating the company’s corporate structure.
Detailed Anti-money laundering compliance, Complaints and Internal Control policies and procedures.
Corporate documents (same as those mentioned in section 2. Company Structure above). As registered agent, we provide a notarized set of copies which we then submit along with the application to IFSC.
Proposed website name that will be used once the licence is approved.
Name of external auditor who will prepare the audited financial statements on an annual basis.
Certificate of Qualification of Directors and Management – At least one person must possess the expertise relevant to the type of licence being sought.
Letter from either the Director, Shareholder or Beneficial owner of the applicant company indicating awareness of the following:

That a licensee should not offer services to residents of a country whose laws require such a licence prior to engagement of such services.
The Standard Conditions attached to the type of licence.
That the Memorandum and Articles of Association of the company will not be amended to provide for the issuance of bearer shares.

IFSC Evaluation process

In processing applications, the IFSC will conduct its own due diligence of shareholders/beneficial owners, directors and management and will evaluate and assess the following:

The fitness and probity of each shareholder, director and management
The viability of the business plan
The AML/CFT Compliance Policy and Procedures to ensure compliance with the respective law and regulation
The Complaints and Internal Policies and Procedures to ensure that they are detailed and address all pertinent areas.

It may take up to three months for the IFSC to review the application. At this point, the IFSC may need further clarification of information or request additional information. Once all the information is submitted, the application will be evaluated and it will be determined whether the licence is approved or denied.

Approval of the application

Once the application is approved, a letter will be sent to the Registered Agent requesting payment of the licensing fees and requesting that the company provide the bank confirmation letter. Upon evidence to this effect, the license certificate will be prepared and issued.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

HOW DO I CHANGE THE NAME OF MY FOUNDATION?

We are often asked How Can I Change The Name Of My Foundation?

To change the Name of a Foundation, in the first instance, we will need from you (if you have not provided this already) written instructions via email to change name confirming the existing name in FULL and intended future name (it’s wise to submit two preferred names in case the first choice is not available).

Once in receipt of an email copy of the above authority (together with our fee, see below) within 24 hours we will:

(a) seek name approval from the registry and advise you of name approval/refusal: &

(b) draft and send to you (and then collect from you via email and airmail please, duly signed) a Change of Name minute/resolution

Once we have received by email a signed copy of the resolution, within 48 hours we will draft & submit to the registry an amended Charter & a Board Meeting resolution extract (signed by us, containing all the relevant points of the above resolution but with the Foundation Councillor’s names not mentioned, to preserve privacy). If no reply is received from the Registry within 48 hours we will follow them up with a phone call

Once the communication/certificate is received from the registry confirming that that the PIF’s name has been changed (this should be received within 48 hours of our submitting to the registry the amended Charter & a meeting resolution Extract), we will email you, within 24 hours, to advise that the name has been changed

Once the Change of Name Certificate has been received within 24 hours we will email you a copy and will dispatch original by airmail or courier as advised by you

Cost of attending to Change of Name as set out above is $399 inclusive of government charges and courier if required. As per Company policy payment is required in advance and may be made by bank transfer or credit card, or via paypal account (see ac details attached; if you’d prefer to pay by car or via paypal account please advise and we will send you the necessary).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com