One of the top issues to take into consideration when starting a business is the taxation regime in the chosen jurisdiction. Many locations throughout the world offer tax-friendly regimes for investors and these countries will often also have a simplified company formation regime. One example for investors in Europe is Malta, where company formation is easy and the taxes are low, compared to other countries in the region.
Top low tax locations for starting a business
Investors can choose between offshore and onshore low tax locations. The first category includes cities like Hong Kong or Singapore as well as Dubai, which is part of the United Arab Emirates, where there is no applicable federal corporate income tax regime.
The offshore low-tax locations include: the Bahamas, Seychelles, the British Virgin Islands, the Cayman Islands or Belize. For some investors, offshore company formation may be the suitable choice, however, others may want to open an onshore business that will also benefit from the credibility and the reputation of the jurisdiction itself, such as in the case of Singapore, for example.
There are a number of countries worldwide that offer a low-tax regime and they can also be found in Europe, for example, Cyprus, Bulgaria or Ireland.
What to take into consideration when opening a business
The local taxation regime is important when starting a business as it will imply lower overall costs for running the company. However, tax-friendliness may not be the sole criterion when choosing the location for the future business.
Issues like the general steps for company formation, the availability of qualified employees and the requirements for residency for the business founders can be important when starting a company. Lastly, investors in certain business fields may also want to take into consideration the proximity to their target market or clients. For this purpose, they may want to base their business in a country that offers accessibility to other markets, in the same way that Hong Kong can be used to access the Chinese market.
When looking for a low-tax destination, investors should remember to check the applicable corporate and dividend taxes, as well as the number of double tax treaties the chosen jurisdiction has signed with other countries worldwide.