Company- Management | Offshore Companies International

How To Get Maximum Privacy & Asset Protection Offshore

If you’re looking for maximum privacy and or for maximum asset protection you might want to give thought to setting up a three-layered structure ie a tax free Offshore Company plus a tax free Offshore Trust plus a tax free Private Foundation (ie the shares of the Company are held by the Trust, the sole beneficiary of the trust is the Foundation and the beneficiaries of the Foundation would be whoever you nominate eg your family members).

We are often asked (by clients committed to setting up a Company and a Foundation) what’s the advantage/s of interposing a Trust between the Company and the Foundation?

Say you have 3 structures in place ie an Offshore Company and Offshore Trust and an Offshore Foundation (ie a serious asset protection structure). Say a firm of vulturous lawyers are suing you and they suspect you have assets held by an Offshore Company (from which the Lawyers hope to extract recovery for their client + a fat fee for themselves).

The first thing that would happen is the vultures would try and find out who owns the Offshore Company. Unless you are involved in some very serious criminal activity (eg drug trafficking, money laundering, terrorist financing etc) no one should be able to find out who the owner/shareholder of that Offshore Company is (or who the beneficiaries of any Trust or Foundation beneath it are – see below).

To crack the privacy veil anyone wanting to either (a) attack/get hold of assets held by the Company/Group or (b) find out who actually owns the Offshore company would have to apply to the Supreme Court of the Country where your Offshore Company is incorporated for a disclosure order ie a court order compelling the names of the shareholders/owners of the Offshore Company to be revealed.

Before the Court will even hear the application the vultures would have to produce evidence, ie a prima facie case, proving that the Offshore Company (or persons closely connected to it) has more likely than not been involved in serious criminal activity as defined.

If they do get the order they would find that the Offshore Company is owned by an Offshore Trust in a 2^nd country.

The lawyers for the vultures would then have to pack their bags go home and start all over again. That is they would then have apply to the Supreme Court of the country in which the Offshore Trust is registered for a disclosure order (ie for an order requiring that the names of the beneficiaries of the Trust be revealed). Again, usually before the Court will even hear the application, the vultures would once again have to produce evidence ie a prima facie case proving that the Trust or persons closely connected to it are more likely than not to have been involved in serious criminal activity as defined.

Say by some miracle they do get that order. All they will find out is that the sole beneficiary of the Trust is a Foundation registered in a 3rd jurisdiction.

The lawyers for the vultures would then (again) have to pack their bags go home and start over. That is they would then have apply to the Supreme Court of the country in which the Foundation is is registered for a disclosure order ie a Court order requiring that the names of the beneficiaries of the Foundation be revealed. As usual before the court will even hear the application the vultures would again have to produce evidence ie a prima facie case proving that the Foundation or persons closely connected to it are more likely than not to have been involved in serious criminal activity as defined.

And if the Company’s bank account is held in a 4^th country the vultures would need to appear before a Court in a 4^th country seeking an order that the Company’s Bank Account in that country be frozen (ie pending finalisation of litigation/claims against the company or its owners).

As any experienced litigation lawyer will tell you what’s described above is the lawyer’s equivalent of having to climb Mount Everest. The time it would take and the legal costs involved would be virtually inestimable.

In this scenario commonly the Trust is used to buy/hold assets/investments. Why? Because included in the laws of most serious Trust jurisdictions are non-attack clauses. That is provisions that specifically say (a) that Trust assets cannot be attacked once transferred to the trust and (b) that any foreign law or judgment purporting to grant access to Trust assets shall not be recognized.

It should come as no surprise to anyone then (given the proliferation of litigation lawyers and the advent of information exchange between OECD type jurisdictions) to hear that the use of multi-national Offshore Corporate Structures is on the rise.

Hopefully after reading the above you can well understand why…

PS OCI Offers a triple structure package. Check this link for details: https://offshoreincorporate.com/how-to-create-the-ultimate-tax-effective-offshore-corp/

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Get Around Cryptocurrency Trading Tax Rules

In a last-minute change ahead of the implementation of new tax rules for virtual currency trading, Thai lawmakers have announced that virtual currency trading on regulated exchanges should be exempt from value-added tax.

Under the new regime, gains will be subject to a 15 percent capital gains tax charge, with the tax to be subject to withholding, and a seven percent value-added tax charge will be assessed where trades take place off an approved exchange.

The introduction of tax comes alongside a new regulatory regime for the sector, with new value-added tax registration obligations arising for many industry players.

Interestingly Cryptocurrency Trading is an activity which lends itself well to an Offshore Corporate Structuring Plan.

If you are resident in and trading Cryptocurrency from Thailand (or somewhere like Thailand which has brought in a Cryptocurrency Trading Tax Regime) it may be possible to trade under the guise of a (tax free) Offshore Company and avoid tax at home on your trading profits

To summarise how it would work (assuming you intend to trade your own money or borrowed money) is:

You set up a zero tax International Business Company
The IBC opens an account with the Cryptocurrency Exchange/s
The Company is set up with a (nil tax jurisdiction resident) Nominee Director and a (nil tax jurisdiction resident) Nominee Shareholder (alternatively, and for maximum privacy, a tax free Private Foundation or Trust could be to set up to hold the IBC’s shares).
You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
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) and you pay tax at home on those earning. 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)
If you don’t want the authorities to know how much money you are earning by way of wages you could use an anonymous ATM or Debit/VISA card to withdraw your wages/fees from an Auto Tele Machine
The majority of your trading profits can be banked and or reinvested Offshore potentially tax free.

Local/new laws can have an impact. Hence you should seek local legal, tax and financial advice before incorporating an IBC for such purposes.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How to Buy Real Estate Using an Offshore Company

We are often asked by clients How can I buy a piece of real estate in the city where I live using my Offshore Company?

There are several options here:

You could limit your purchase to a new property which in most cases would get around any Foreign Investor Approval issues. In that case you could either:

(a) Use your existing Company to buy the property; or

(b) Use your Foundation or Trust to buy the property; or

(c) Have the Foundation/trust or your existing Offshore Company fund/incorporate a stand- alone Real Estate Investment Company and have that Company buy the property. This would be the most discreet way to do it especially if you are regularly receiving payments from (ie if you have a visible relationship with) an existing tax free Offshore Company

If you’re buying an existing local property (eg a dwelling) which would require Foreign Investor Approval/Sanction you could form a local Limited Company and have any of the above 3 suggest Offshore Entities supply the funding for the property as Mortgagee (for this to work the local Company would need to enter into a loan agreement with at least interest only payments and sign a mortgage on commercial terms).

As regards the process once you’ve decided which entity to use as Consultant/Adviser to the Offshore entity:

You would make certain recommendations in writing to the Director/Trustee/Councillor (ie to purchase XYZ Property)
The entity would then call a Board meeting authorizing the entity to proceed with the transaction
If you need to close the sale quickly the Board could provide you or your local Lawyer with a Power of Attorney enabling you to sign the Purchase/Sale Contract

If you want to live in the property the smart thing to do would be to have the Offshore Company which owns the property hire a local property management business; They would advertise the property. You would apply to lease the property and then pay rent to the Property Managers in an arms’ length arrangement, which shouldn’t raise any suspicions. (Contrast that with iIf you are sitting rent free in a property owned by a tax free Offshore Company; for sure and certain you can expect that to raise a red flag, eventually, with the authorities).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Why Use Nominees for Offshore ICOs?

Are you looking to launch an ICO via Incorporation of an Offshore Company?

If so there are at least two reasons why you would want to consider deploying a Nominee Shareholder and or Nominee Director as part of your Corporate Structure:

1. Tax Planning Considerations

Generally speaking an Offshore Company which is seen to be managed and controlled from Onshore can be taxed onshore.

Hence when setting up an Offshore Company, if you want to minimise the chances of the Company being taxed “onshore”, Management and Control of the Company will need to be, and be seen to be, taking place from Offshore. How that can be achieved is by deploying a Nominee Shareholder and or Nominee Director as part of the Corporate structure.

If you are also setting up a Foundation as part of the Corporate structure you will want to have the Foundation founded by a Nominee Founder (which service we provide) which then assign its rights confidentially to you. Again for tax planning purposes you will want the Foundation to be managed day to day by a nil tax jurisdiction resident Nominee Councillor (which service we also provide).

There are a number of features we can and will include to protect your ownership rights (which will prevent the Nominees from running away with your property or money). For more information on that and how the Nominee Services can work for you see our FAQs section and also please click on these links:

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

https://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/

How it works practically speaking is the company would do the buying and selling, ie it would generate the income. Ideally, you would be appointed as Consultant or as an arms’ length adviser to the Director of the Company with certain areas of responsibility. You might then be paid a commission (e.g. a percentage of business or sales introduced) or a retainer or a combination of the two.

As part of your brief you might also be given signing power on a bank account reporting/answerable to the Director. However that relationship is structured for legal reasons, it would need to be seen to be commercially realistic.

The income you generate from this would be paid to you (or your local ie/eg onshore company which, I imagine, would then pay a dividend to you), which would be assessable income at home for you (although a smart Tax Accountant should be able to find a heap of tax deductions/writeoffs to reduce the amount of tax payable on that income eg rent, home office, car, travel, utilities, electricity, phone, internet, furniture, computers/plant & equipment, stationery, professional library, subscriptions etc etc). The remainder of the profit could be held (and/or reinvested) offshore potentially tax free.

You could alternatively be given a Power of Attorney. For guidance on which option to choose please click on this link: https://offshoreincorporate.com/faq/should-i-select-a-general-power-of-attorney-or-a-consultancy-agreement/

2. Nominees and ICOs

In the case of an ICO there are different and additional reasons why you would set up the Company using at least a Nominee Director.

The main risk for an ICO promoter is regulatory risk. Simply put if you are offering a Token to investors it could be classified under certain countries laws as a Security.

Generally speaking it is illegal to offer a Security to the general public unless (a) it is a registered security and (b) you are a licensed securities dealer.

If your Company comes under the Regulator’s microscope and you are the Director of that Company you could be charged with unlawfully offering a security. In certain countries the penalty for this, if you’re found guilty, can be imprisonment.

If you want to minimise the chances of this happening, you would be wise to deploy a Nominee Director (and ideally also a Nominee Shareholder) as part of your Corporate Structure (even if you have every intention of paying tax at home on the Company’s entire worldwide income)

If you’re concerned about appearance what you could also do (ie where a Nominee Director is deployed) is have yourself appointed by the Company via a Consultancy Agreement and choose your title. Eg In emails or texts or letters etc you could call yourself CEO or Founder or GM or CFO or Client Liaison Manager or whatever sounds best to you (anything but Director)!

Local laws can also have an impact. Hence you should seek local legal financial and tax advice before committing to incorporate an Offshore Company as your ICO Launch vehicle.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Use an Offshore Company To Act As a Commission Agent

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 the right 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.

Launching an ICO in Malta

The picturesque EU island state of Malta is on the brink of becoming one of the first, if not the first, jurisdiction to offer a clear registration and incorporation scheme for ICO Startups.

Back in the noughties Malta showed a penchant for supporting disruptive technology by becoming one of the first jurisdictions to regulate the growing Internet Gaming industry. As things now stand it has grown to become one of the largest and most respected online gambling regulators in the world.

Of late it has taken an active interest in recent development in the digital world, and in particular as regards the advent of blockchain technology, ICOs and cryptocurrencies and is becoming a target jurisdiction for startups and businesses working within the crypto-sphere.

Most saliently the government of Malta is now making moves to regulate these new industries proposing a legislative framework that will both support the organic growth and development of the sector and protect investors looking to point their hard-earned towards the Cryptospace.

The Malta Financial Services Authority (“MFSA) has also released a feedback statement proposing an upcoming array of regulations for collective investment schemes looking to invest in virtual currencies, designed to protect the interests of investors as well as the integrity of the virtual currency market.

The Three Acts

In February this year, the Maltese Government revealed its intentions to table three draft Acts that would aim to deliver extensive regulation for ICOs, Virtual Currencies (“VCs”), and blockchain technology.

At the core of the program the Maltese government’ has announced its intention to create a new Authority which will be known as the Malta Digital Innovation Authority (MDIA). The MDIA will manage the certification of blockchain platforms and cryptocurrencies, and will oversee the operation of ICOs.

It is proposed that the MDIA:

(a) will function as both a regulator and a watchdog over ICOs and will also operate as a consultative organization in that it will be saddled with promoting government policy and protecting the reputation of the jurisdiction.

(b) will be solely responsible for the registration and certification of Technology Service Providers with respect to the proposed TAS Act

(d) will hire inspectors and have the capacity to hand down administrative penalties

Regulation of Initial Coin Offerings Act

The second Act will cover virtual currencies and will include stringent guidance and regulation guidelines for Initial Coin Offerings and other services related to VCs.

The Act is also likely to effect brokers, Cryptocurrency exchanges, wallet providers, investment advisors, market makers, and asset managers that deal with cryptocurrency/s.

Certain ICOs will be able to come within the ambit of investment services regulations; consequently the MFSA proposes to roll out a proposed Financial Instruments Test which will determine whether the ICO or cryptocurrency could be considered as a financial instrument as covered by the investment services regulations or whether it will fall under the ambit of the VC Bill.

The Financial Instruments Test will apply to persons or companies which are offering ICOs conducted in Malta to determine whether same should fall under the ambit of the relevant Maltese Authority. The test will also impact on individuals who provide services or activities regarding non-classified VCs. It is anticipated that the analysis will provide a badly -needed modicum of legal certainty and clarification regarding the asset in question.

The Act will give rise to the first legal framework of its type (in any international jurisdiction) to govern ICOs and will deliver a regulatory framework applicable to service providers.

ICOs introducing VCs which do not currently qualify as financial instrument will under the proposed new regime be set transparency requirements including a standardized list of disclosures which must be provided in the whitepaper.

Individuals providing such services will be required to meet licensing requirements in addition to complying with ongoing obligations. The MFSA will also have the power to investigate and if necessary, suspend an ICO or the trading of a VC on any exchange or platform.

Technology Service Providers Act

The second proposed Act in the new raft of legislation will be the Technology Service Providers Act (“TAS Act”).

This statute will regulate Technology Service Providers, and will also certify and verify Technology Arrangements provided they feature an administrator which has been registered with the MIDA.

Virtual Currencies Act

In February 2018 the Maltese Government announced that “The MFSA is proposing that, in order to achieve the objectives of financial regulation, certain VCs and activities pertaining to them would be licensed and regulated under a new legislative framework to be drafted by the MFSA and adopted by the Maltese Parliament, the Malta ‘Virtual Currencies Act’.”

Securitized tokens will be regulated under the new regime, and utility tokens will be given more autonomy to conduct business without having to obtain a financial services license from the FMSA. The definitions of both under the proposed Malta law are as follows:

“‘Securitised tokens’ are defined as those embedding either underlying assets (akin to commodities) or rights (e.g. quasi-equity rights) and effectively refer to those tokens that qualify as financial instruments.

‘Utility tokens’ are further defined as those providing either platform/application utility rights or protocol access rights, without any underlying.”

There is no statement as to whether the product must be working prior to the ICO, rather focusing on just the intention of the product itself. This is vitally important, as many ICOs would find it very difficult to create a working prototype without funding.

There is also no mention of a token losing its utility status if the company receives funding before the ICO, which is also a serious plus for VC backed tokens.

Bi Finance Move to Malta

In March 2018 Japanese regulators took issue with giant cryptocurrency exchange Binance for failing to register with their regulators, the FSA. That registration would have caused regulatory scrutiny such as would seriously affect the exchange’s able to offer non-identity verified trading accounts in the international marketplace.

By this time Binance had evolved to become the biggest cryptocurrency exchange by volume handling billions of dollars of daily transactions and holding Cryptocurrency for millions in a business that stakeholders did not wish to change. Its popularity hitherto had been dependent on its ease of doing business, which registration in Japan would have seriously curtailed.

This led Binance to decide to abandon Japan and relocate…. to Malta! With some pundits predicting that they will employ as many as 200 people in Malta, the news of their planned move was welcomed by none other than the Maltese Prime Minister who publicly welcomed Bifnance to Malta via Twitter.

Latest News Out of Malta

In a consultation paper published on 13 April (which you can read here: file:///C:/Users/Pat/Downloads/20180413_FITest.pdf ) the Malta Financial Services Authority (FSA) has laid out a proposal for a so-called Financial Instrument Test, which will ultimately become part of the proposed Virtual Financial Asset Act (VFAA).

The FSA says the methodology of the test has been arrived at based on feedback from its previous discussion paper, released in November 2017, which for the first time announced the concept.

Per the latest release, the test will comprise a three-stage process that will first verify whether a distributed ledger technology (DLT) asset falls under the category of “virtual tokens” – (ie Utility Tokens).The paper states:

“Virtual token is a DLT asset which has no utility, value or application outside of the DLT platform on which it was issued and that cannot be exchanged for funds on such platform or with the issuer of such DLT asset.”

Tokens falling within this definition will be exempted from the VFAA, according to the FSA.

Assets capable of being traded in a secondary market will fall within the scrutiny of the second phase of the test, where various securities definitions set by European financial regulators will be applied, including transferable securities, money market instruments or financial derivatives.

Should a token sit within the definition of any of those assets, it would then fall within the reach of the regulatory oversight of the existing Markets in Financial Instruments Directive (MiFID) that is enforced within the European Union financial markets.

That said, a negative result in stage two will lead to the third stage of the test, which would see ICO tokens regulated under the proposed VFAA. The FSA said this method will embrace a hybrid framework that adopts both existing EU regulations, as well as a Maltese regs.

The Future?

The proposed legislative Crypto framework in Malta arrives at a time when the island’s government is looking to embrace blockchain innovation with a well-established legal environment aimed to attract blockchain businesses to the country.

The vision is starting to bear fruit:

• Several notable cryptocurrency exchanges – including now OKEx as well as Binance – have already set up business operations in the country; &

• Malta’s first digital asset hedge fund has grown into a multi-million dollar exchange; &

• ICOs are starting to consult with Maltese law firms, and the largest cryptocurrency exchange with the aim of total decentralization has been welcomed with open arms.

Moreover the process to license and launch an ICO via Malta is anticipated to be months quicker than it would be if you were trying to launch out of a larger, more bureaucratic jurisdiction (eg Switzerland).

Hopefully the legislation will be enacted before years end. Watch this space for developments.

Why Incorporate in Malta?

In addition to its looking to embrace Crypto related business Malta is also a very attractive jurisdiction in which to incorporate. Key features include:

• Low corporate tax (maximum of 5% or lower effective tax rate for trading companies)

• A highly educated, reasonably-priced English-speaking workforce (88% per cent of the population speaks English), particularly in the legal, accounting, insurance, banking and maritime professions

• A strong stable economy

• A high (and ever improving) standard of living

• Political stability

• Certainty of the rule of Law (much of Malta’s laws were derived from its former ruler Great Britain)

• Reliable telecommunication systems

• Access to European markets (Malta is an EU member)

• An extensive double-taxation treaty network (with over 50 countries)

• Low operating costs relative to the rest of Europe

• Strategic location at the crossroads of three continents, serving also as Europe’s Middle Eastern outpost

• Liberal foreign direct investment regime

Taxation Benefits

Malta has a full-imputation system of corporate taxation and hence any income tax that is paid by a Maltese company is fully imputed or credited to the shareholder who receives dividends from the company, enabling the same to benefit from the full relief of economic double taxation of corporate profits.

Although the standard rate of taxation in Malta is 35% of the chargeable income of the company, a shareholder of such company is entitled to a refund of any tax paid by the company of 5/7ths, 6/7ths or 7/7ths depending on the source of income of the company. This typically results in an effective net tax rate of approximately 10%, 5% or 0% respectively

Low Incorporation and Maintenance Costs

A company can be set up in Malta with a minimum share capital of Euro 1,165, 20% of which should be paid up. This means that the minimum amount that you need to commit by way of Capital to incorporate a company in Malta is only 245 Euros. The minimum Registry fee required to be paid is Euro 240 with minimum annual payments of Euro 100!

Exemption from Duty on Documents

Malta companies carrying out international activities are exempt from stamp duty on documents meaning that the transfer of shares in and increases of share capital of a Maltese company are exempt from duty.

Double Taxation Treaties Signed

Malta has signed over fifty double taxation treaties, with the latest being the Malta – Russian Double Taxation Treaty which should come into force at the beginning of next year.

Capital Gains Tax

Capital gains realised by non-residents on transfers of shares and increases of share capital are not subject to tax in Malta if the assets of the company do not include immovable property situated in Malta.

Other Benefits of Incorporating a Company in Malta:

• No withholding tax on the payment of dividends, interest or royalties;

• No controlled foreign company legislation or transfer of pricing rules;

• No thin capitalization rules;

• No exit taxes, wealth taxes, payroll based tax or trade tax.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Setting up an ICO in Mauritius

Since its independence in 1968, the former French and British colony of Mauritius has become one of the most successful economies in the region by focusing its resources on making the country a regional technology and financial services hub. Now, Mauritius is looking at blockchain as the vehicle by which to:

(a) solidify its competitive jurisdictional advantage; and

(b) drive continued innovation on the island.

Currently the Mauritius Financial Services Sector is seeking to brand itself as a regional haven for blockchain innovation and in doing so has the full support of the key government department (ie the Board of Investment Mauritius or “BOIM”) who can see that such technologies have the potential to take the Mauritian Economy to another level.

Publicly the BIOM have stated “Blockchain is an area where we will be focussing, building competencies, and ensuring that it permeates other sectors of the economy and government. Blockchain is one of these technologies we want to drive. We see a window of opportunity here to be able to leapfrog others”.

This a far cry from many, if not most, Financial Services Based Economies who are looking to limit the ability of locally registered International Business Companies and etc to undertake Crypto related activities.

Given Mauritius has a well-established financial services sector, a vibrant banking Industry and highly developed IT/communications technology industries, positioning itself as the preferred regional choice for investors in blockchain and financial technology makes good sense from a nation building perspective.

The Mauritius Regulatory Sandbox License

In a bid to become the Indian Ocean blockchain hub, Mauritius is reaching out to Cryptocurrency Developers and Entrepreneurs (in particular new ICOs) to take advantage of the country’s new Regulatory Sandbox License (RSL).

The sandbox allows businesses operating in areas including financial, medical and communications technology to begin operations notwithstanding the absence of a formal legislative or licensing framework.

It’s a clever move by the Mauritian Government because, prior to the Regulatory Sandbox License Project, the Mauritian Financial Services Authority had been unable to approve or incorporate innovative projects due to gaps in the regulatory framework.

The RSL has its seed in similar regimes employed in Singapore, the UK and Australia and is open to all innovators, with a particular focus on attracting blockchain innovators across all spheres.

The Mauritian Government hopes that by assisting to progress such projects the direct and indirect revenues raised will be the engine that drives local and international business enabling it to foster a smart city concept with links to other hub cities.

To be considered for approval for an RSL in Mauritius you must show:

(a) that the project is innovative

(b) that the project is beneficial to the Mauritian economy

Assuming you provide the Regulator with all the necessary information they require (and that the application is successful) such a license can be obtained within as little as 30 days.

Securities Framework

As things currently stand the securities laws in Mauritius are favorable in that a Utility Token doesn’t fall under the definition of a Security.

As such the Regulatory Sandbox License provides companies and startups with the opportunity to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers, but with regulatory supervision.

In fact the Mauritius board of investment has publicly announced their desire to attract blockchain startups to Mauritius; Unlike other jurisdictions such as Switzerland, the UK and Singapore (where their sandboxes are aimed at companies in the financial services field), the Mauritius RS License is available not only to businesses innovating in the financial technology fields but also to businesses focused on digital identities, digital currency, online healthcare, blockchain and the decentralization systems of information (amongst others).

There is a selection criterion for an RSL as well as several conditions relating to the activity such as safeguards, terms and conditions, compliance with existing regulations, referring to general business operation and monitoring mechanisms (amongst others).

In summary its regulatory sandbox framework makes Mauritius one of the most attractive jurisdictions for entities in the blockchain space which are seeking or looking to be regulated.

Why Set Up In Mauritius

Why should blockchain investors/entrepreneurs consider setting up in Mauritius? Because:

Mauritius has a pro-business and healthy governance environment (its internationally recognized as the strongest in sub-Saharan Africa)
Taking into account factors including ease of starting a business, enforcing contracts, obtaining credit, protecting investors and paying taxes Mauritius is considered to have the best business climate of any country in the region and ranks 49th out of 190 countries worldwide. (Source: The World Bank’s annual “Doing Business” survey)
Mauritius is committed to ongoing development of the country’s communications infrastructure – including projects to roll out free Wi-Fi across the island and install fiber optic connections in every home (a key attraction for technology investors)
Mauritius is the ideal doorway for investment into Africa and India (See below)

Access to Substantial Markets

Its political/economic stability and geographic location have enabled Mauritius to develop into a popular venue for financial services companies looking to make the jump into new markets on the African continent (where many of the world’s largest untapped Banking/Retail Investment customer populations exist).

Simply put Mauritius is a country that many of the governments of African states would like to emulate; if you have systems that have been tested properly in Mauritius – it gives a kind of assurance and credibility to that solution when you market it in Africa. (As the BIOM itself puts it “Having done it in Mauritius gives it lots of mileage for you to expand into Africa.”)

Other advantages to using Mauritius as the springboard for investment into Africa include:

Mauritius possesses a bilingual workforce speaking both English and French (two of the African continent’s most spoken languages)
Mauritius has tax treaties with more than 20 African nations including South Africa, Zambia, Uganda and Rwanda.

Mauritius also boasts very close cultural and economic ties with India – whose economy is projected to surpass China if/when it becomes, as predicted, the world’s most populous nation in the next ten years (approximately two-thirds of Mauritians are of Indian descent)

Mauritius has also been the largest single source of foreign direct investment into India in recent years on account of its having a (very) favorable double taxation avoidance treaty with India (which can be accessed via incorporation and deployment of a Mauritius GBC 1 Company – contact us for details).

ICOs in Mauritius are commonly registered/licensed under the umbrella of a Mauritius Foundation.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Where To Setup an ICO – Gibraltar?

Gibraltar has positioned itself as one of the first, “crypto friendly” jurisdictions.

In late 2017 Gibraltar released a regulatory framework for blockchain businesses that shored up legal status of the technology as a means of transmitting payments.

Now, in possibly a world first, it has conceived a set of regulations that provide for the registration and regulation of ICOs (Initial Coin Offerings).

This combined with its tax efficient company structures has seen many new start-ups flocking to Gibraltar to host their ICOs & ITOs.

With DLT regulations now in force, and Gibraltar seen as a new hub for crypto related businesses, there is also a small window of opportunity available for these currently unregulated ICO & ITO companies of Gibraltar.

The Gibraltar Regulator is planning a complementary regulatory framework covering the promotion and sale of tokens, aligned with the DLT framework.” The proposed regulations, which are reported to be implemented in the latter stage of 2018 are set to cover any person related to Gibraltar and carrying out activities related to:

The sale, promotion or distribution of Tokens by persons connected with Gibraltar;
Secondary Market activities relating to tokens, carried out in or from Gibraltar; and
Providing, by way of business in or from Gibraltar, advice relating to investment in tokens.

Authorised Persons

One of the key aspects of the token regulations is the regulation of “authorized sponsors” who will be responsible for assuring compliance with disclosure and financial crime rules.

Gibraltar is also reportedly considering regulation relating to investment funds associated with cryptocurrencies and tokens.

This is a wide and general scope, meaning it is likely that the new regulations will cover most if not all aspects of ICO & ITO Gibraltar companies, or individuals.

In effect they have decided that a one-size-fits-all regulatory approach would be inappropriate for the blockchain funding model. Consequently, Gibraltar is instead developing a set of principles for best practice. With these principles, each authorized sponsor will be able to “come up with its own methodology” to apply to the ICOs or tokens that they sponsor.

The new legislation is the logical next step after Gibraltar’s launch in January of a license for companies working with distributed ledger technology (which has made it an appealing destination for blockchain startups).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Estonian Cryptocurrency Exchange & Wallet Service Provider Licenses

Estonia has a favorable tax and legal environment for cryptocurrency exchange companies. It also offers registration for businesses looking to offer Cryptocurrency Wallets.

This small European Union country of just 1.3m people is regarded as one of the world’s most advanced digital nations and is fast becoming a viable alternative to the behemoth Financial Services Jurisdictions such as Singapore and Switzerland – its competitive advantage being it offers less red tape and lower establishment/operating costs.

Companies aiming to do business in the Cryptosphere can apply for 2 different activity licenses in Estonia:

(a) A Cryptocurrency Exchange License

(b) A Virtual Currency Wallet Service License

Both of these licenses are issued by the Estonian Financial Intelligence Unit (FIU) and can be applied for separately or together (in fact it’s cheaper to apply for both at the same time). The full procedure to set up the company and obtain the licenses can be carried out remotely with no visit required (at the time of writing, on average, it takes 30 days from receiving all necessary documentation).

General

The operating license are issued by the Estonian Financial Intelligence Unit (FIU) which is a government body that operates as an independent cell of the Estonian Police and Board Guard Dpt. (Check this link for details: https://www2.politsei.ee/en/teenused/majandustegevuse-luba.dot )

The licenses can be applied for at the same time (albeit via separate applications) and at the conclusion of the application process 2 separate Licenses are issued; one enabling you to offer a Cryptocurrency Exchange Services, the other enabling you to offer a Cryptowallet service. For details of the main Acts regulating the activity check this link: https://www2.politsei.ee/en/

The Company is classified as a Financial Institution but has no special reporting requirements (other than those which normally apply to an Estonian Company)

Estonian Company Requirement

To successfully apply for a cryptocurrency exchange and/or wallet service license you will firstly need to incorporate an Estonian Company.

This process can be carried out remotely with no visit required and it usually takes about 5 business days for the full procedure. The key features of the Estonian Model of Company are as follows:

• A minimum of 1 shareholder only is required

• The shareholder/s can be a natural person or a legal entity

• There is no local shareholder requirement (ie the shareholder/s can come from any country)

• A minimum of 1 Director only is required

• There is no local Director requirement (ie the Director/s can come from any country).

• No secretary is required

• No stand-alone office is required (only a local registered office and registered agent which service OCI will provide).

• Beneficial owners’ details must be disclosed to the authorities starting from September 1st 2018 though a Seychelles Foundation can be deployed to act as the beneficial owner/shareholder (Contact us for details of how/why that will work)

Tax on Cryptos

Estonia also offers a competitive tax environment for such businesses. Features include:

• Virtual currencies are not subject to VAT

• Corporate profits are not taxed unless or until dividends are paid

• Income tax of 20% is charged on gross dividends (calculated as 20/80 of the net dividend).

• Special conditions apply enabling a Company to apply for a 14% rate beginning September 1st 2018.

Set Up Procedure and Documentation

Our Legal Team can/will attend to all that needs to be done in order to comply with Estonia’s Anti Money Laundering (“AML”) Regulations including:

Internal Security Measures

• assessment and management of the risk of terrorist financing and money laundering;

• collection and maintenance of statutory records;

• performance of the notification obligations;

• notification of the management as/when required;

• internal control rules for checking adherence thereto.

Rules of Procedure

• identify low risk transactions and establish the appropriate requirements/procedures to enable the execution of such transactions;

• identify higher risk transactions, (including risks arising from means of communication, computer systems and other technological developments) and establish the appropriate requirements and procedure for the execution and monitoring of such transactions;

• establish the rules that ensure that Due Diligence/KYC requirements are met;

• set out the requirements and procedures for keeping the necessary documents and records;

• set out the requirements and procedures for an application including instructions to staff etc for how to effectively identify whether or not a person is:

(a) a politically exposed person;

(b) a person whose place of residence or seat is in a country where insufficient measures

for prevention of money laundering and terrorist financing have been laid out;

be involved in money laundering or terrorist financing;

(d) a person against whom international sanctions have been imposed;

(e) a person with whom a transaction is carried out using telecommunications.

Legal Framework & Requirements

The legal framework for Crypto Companies in Estonia is governed by the Money Laundering and Terrorist Financing Prevention Act which passed into law in November 2017.

We can/will prepare all policy documents and manage the process as regards the FIU acting under a Power of Attorney (PoA). For a remote setup we will require the following documentation:

• Valid copy of passport *

• Certificate of non-criminal record from the registry of convictions (not older than 3 months) for shareholder(s), board member(s), ultimate beneficial owner(s) and authorized person/s *

• Power of Attorney *

• Brief description of planned business model and CV’s of all participants

* Notarized and confirmed with an apostille, in English (or notarized English translation)

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Company Formation in Estonia

Estonia is a Nordic country of 1.3 million people nestled on the shores of the Baltic Sea in Northern Europe.

Since regaining its independence with the collapse of the Soviet Union in 1991, Estonia has become one of the most economically successful of the European Union’s newer eastern European members.

Estonia has a highly educated population (English speaking proficiency is amongst the world’s highest) low corruption and sits at the forefront at the development and delivery of both private and, in particular public, services by digital means. Of late it has stolen a jump on rival jurisdictions by offering a specific licensing regime for Cryptocurrency related businesses (see below for details).

Limited Liability Companies in Estonia

The Estonian private limited liability company (Osaühing or OÜ) is the most common form of business as its shareholders have no personal proprietary liability for the company’s obligations.

Key benefits of incorporation in Estonia include:

Tax Efficiency: Zero tax is payable in Estonia if profits are reinvested

Clean Name: Estonia isn’t known as a tax haven yet can deliver the same results

Stability: Estonia is very stable economically and ranks as highly as the US for non-corruption

Easy 2 set up: To set up you just need 1 Director/shareholder + a legal address/rep in Estonia

Speedy set up available: You can own an Estonian Company within as little as 24 hours

Easy to administer: Estonian Companies only require 1 Director and 1 Shareholder

Access to Europe: A Euro VAT number can be obtained enabling you to trade on the Continent

VAT Free: No VAT is payable on transactions within Europe (outside Estonia)

Cryptofriendly: Cryptocurrency related businesses are welcome to incorporate in Estonia

Bank Friendly: Incorporating in an EU country gives you wide access to EU/1^st World banks

Language Friendly: (Per its Nordic kin) Estonia ranks VERY highly 4 English Language proficiency

E-Residency available: Estonia offers a Digital ID enabling one to securely access government services in and sign docs/do business in Estonia remotely. 98% of government services can be accessed electronically in Estonia. Check here for details:

https://www2.politsei.ee/en/teenused/isikut-toendavad-dokumendid/e-residendi-digi-id/index.dot

Estonia is also one of the most (probably THE most) Efriendly/developed countries in Europe:

Tax filing, tax payment, banking and business registration can all be done electronically
Public services inc Voting, Government services and Ministries are all accessable electronically
Law Courts and Police Services can all be accessed electronically
Estonia has deployed Blockchain technology to secure Health Care Data including as regards health records and medicine prescriptions

For more details click on this Article: http://www.wired.co.uk/article/digital-estonia

Other Features Include:

Low Minimum Share Capital Requirement (just 2,500 Euros)
Payment of the share capital can be delayed indefinitely (if the Share Cap is under E25K)
Low Cost: Incorporation, Legal, Accounting, Banking and other support services are very competitively priced by comparison with the global norms
No withholding tax is levied on profit distribution
Pre-incorporated shelf Companies are available (including some with current VAT registration
You can take up ownership of a new Estonian Company vie the net without needing to leave home

Taxation in Estonia

Estonia has one of the most progressive tax regimes in the world in that:

The tax rate on reinvested profit is 0%
Income tax is charged only at a rate of 20% on gross dividends.
The general VAT rate is 20%.

Corporate profits are not taxed ie (tax rate 0%) unless or until the profits are distributed as dividends; In short, all undistributed corporate profits are tax-exempt. This 100% exemption covers both active income (e.g. trading) and passive income (e.g. dividends, interest, royalties etc) as well as capital gains from sales of all types of assets, including shares, securities, and immovable property.

Estonia levies a corporate withholding tax only on profits that are distributed as dividends, share buybacks, capital reductions, liquidation proceeds or deemed profit distributions. Income tax at a rate of 20% is charged on gross dividends (calculated as 20/80 of the net dividend).

The standard VAT rate (in Estonian käibemaks, KM) is 20% and applies to all supplies of goods and services inside Estonia. The 9% reduced rate applies to accommodation, books, listed pharmaceutical products and medical devices. The VAT rate on the export of goods, intra-Community supply of goods and certain services is 0% (i.e. exemption with credit). If the annual taxable turnover exceeds 40 000 EUR you will need to register with the Tax and Customs Board as a VAT payer.

Employers registered in Estonia (including permanent establishments of foreign entities) must pay social tax on all payments made to employees. The rate of social tax is 33% (20% for social security and 13% for health insurance). Minimum wage in Estonia is 500 EUR/month as of 2018.

Crypto Business Licenses in Estonia

Estonia has a favorable tax and legal environment for cryptocurrency exchange companies. This small European Union country of just 1.3m people is regarded as one of the world’s most advanced digital nations and is fast becoming a viable alternative to the behemoth Financial Services Jurisdictions such as Singapore and Switzerland – its competitive advantage being it offers less red tape and lower establishment/operating costs.

Companies aiming to do business in the Cryptosphere can apply for 2 different activity licenses in Estonia:

(a) A Cryptocurrency Exchange License

(b) A Virtual Currency Wallet Service License

Both of these licenses are issued by the Estonian Financial Intelligence Unit (FIU) and can be applied for separately or together (in fact it’s cheaper to apply for both at the same time). The full procedure to set up the company and obtain the licenses is straight forward and can be carried out remotely with no visit required (at the time of writing, on average, it takes 30 days from receiving all necessary documentation).

Eligibility for such a license is liberally applied (you don’t need be ex Merril Lynch or hold any form of Fund Manager License to be eligible to apply for such a license) and the cost is very reasonable especially compared with the cost of applying for comparable special licenses elsewhere (eg Fund Licenses, Broker’s Licenses etc).

Corporate Services in Estonia

We provide a full range of corporate services in Estonia including, as required: