As global tax regimes become more restrictive, it’s becoming more and more difficult to find attractive, low or no-tax locations to establish offshore entities, while remaining on the good side of global regulators. Read on to discover one such place, and to find out about a great offer than can grant companies a free bank account if they opt to re-domicile there.
The history of humanity has largely been one of migration. Since our ancestors took their first steps out of the savannas of Africa over 200,000 years ago, they have been on a constant search for greener pastures, both literally and figuratively.
The nation states and border that now define much of the world we live in are a relatively recent phenomenon; it is only in the last several hundred years that they have come to dominate the way the world functions and operates.
Before that, there were kingdoms and empires whose sole purpose was maintaining and expanding the power of the given King or Emperor.
Laws were not created to ‘serve the greater good of society’, but to entrench the power of the ruling class.
These pre-modern polities had a number of important characteristics: one was a large underclass of people who were not in any way protected by laws or social services (such as education), and who had little chance of upward mobility. The other was a lack of laws managing a whole range of aspects of life that we now take for granted.
By the age of mercantilism, starting tentatively in the 15th century, a laissez-faire attitude towards economic interactions began to generate an enormous concentration of wealth in western Europe.
European mercantile companies such as the British and Dutch East India Companies essentially undertook colonial expansion privately, flying the flag of their respective kingdoms while establishing trading empires, often supported by private armies, to bring wealth and resources back to the west.
This massive influx of wealth allowed western European countries to build militaries and state structures that entrenched the idea of the nation state as the absolute expression of power in the world.
Depending on who you ask, the last sixty years have witnessed either a waning or a strengthening of the power of the nation state.
This is one of the key arguments surrounding the concept of globalization: on the one hand, the rise of international corporations and organisations, and the growth of international civil society, has diluted the power of a single state to exercise total sovereignty over its dominion.
The counterargument to this would be that although we now have international organizations that define international laws for a wide range of areas – and international businesses that have the power to sway the decisions of governments – the power that states have to control and monitor their populations is greater than ever, both through technology, and through their ability to cooperate with each other in setting international laws and norms.
The truth is probably somewhere in the middle. And the evidence for that can be found in the simple fact that it’s still possible to benefit from having an offshore company and bank account, which can enjoy low or no taxes (as well as many other benefits) from the jurisdiction in which it is registered, while being used for business somewhere else.
In many ways, offshore companies are a relic of an age when nation states were less interlinked, and presented stark differences from one to the other, not limited only to culture and language, but to legal systems too.
However, as a legal structure and concept, they are also very much a product of our time. As global tax regimes in the west have become progressively more extractive, complicated and restrictive, smaller countries have sensed an opportunity to attract businesses to their territories by offering globally competitive regulatory frameworks to set up companies and bank accounts.
While offshore companies and bank accounts are commonly depicted as clandestine, probably-shady legal structures used by criminals to launder money or evade taxes, the reality is that they are a very common, increasingly popular method for individuals and businesses to use the different legal frameworks that exist across international jurisdictions to their advantage.
Added to that, powerful and expansive global frameworks exist that compel countries to adhere to certain rules if they want to be members of the global financial system and trade network.
For those that try to break the rules by allowing their systems to be hijacked by criminals, or by not offering globally-acceptable levels of transparency, the threat of being put on an OECD or Financial Action Task Force (FATF) ‘watch list’ looms large.
Much in the same way as humans have always gotten up and gone somewhere else when things are not looking too great wherever they may happen to be, company migrations follow the same basic logic: when your current location is not serving you well, there is still (luckily) the option of simply going somewhere else.
In the not-so-distant past, setting up an offshore company often involved dissolving your pre-existing company in your home country, and then incorporating an entirely new entity in an offshore jurisdiction.
These days, there are luckily more simple options, which allow for a re-domiciliation of your company to an offshore jurisdiction, without the need of actually liquidating/dissolving it first.
Company migration brings a lot of added benefits, compared to liquidation and new incorporation.
First, it is more simple: associated bank accounts and contracts can all be maintained, and all of the track record and history of the company is transferred with it, allowing for easier adherence to regulatory requirements.
This also means that it is easier for migrated companies to be able to fulfill the ‘Substance Requirements’ of regulatory organisations such as the OECD and EU, as companies that have simply migrated to an offshore jurisdiction will already have documentary evidence to prove the nature and scope of their business operations.
Company Migration Options
While certain jurisdictions that have traditionally been considered offshore ‘havens’ have recently been falling foul – and into the crosshairs – of regulatory organisations such as the OECD and EU, others have been making significant steps to boost their transparency, and have managed to join or keep their position on the whitelist of global regulatory bodies while maintaining their status as attractive offshore locations.
The Marshall Islands is one such jurisdiction, and it offers a lot of benefits.
To begin with, it has recently achieved the impressive feat of being placed on the EU’s whitelist on 14th November 2019, which means that companies and banks in the bloc do not face any hurdles when doing business with Marshall Islands companies.
The Pacific island nation was also removed from the French government’s blacklist in January 2020, while others, such as Panama, the BVI and the Bahamas have been added to it. The French blacklist is an important indicator of a jurisdiction’s global reputation and ability to do business internationally, as France is one of the most active members of the OECD.
Added to that, Marshall Islands companies are governed by its own domestic law – the Marshall Islands Associations Law – which is closely modelled on the highly anonymous and company-friendly law of the US state of Delaware.
This is a quote from the official press release:
As the political and regulatory environments are evolving faster than ever, the Republic of the Marshall Islands (RMI) Corporate Registry recognizes that this may present practical challenges to doing business. Some jurisdictions have become impractical to use. Jurisdictions that were once favored for business now have less than satisfactory ratings with international regulatory bodies and some are not politically stable.
In recognition of these challenges, the Marshall Islands is currently offering free redomiciliation. Choosing the Marshall Islands for redomiciliation (domestication) allows business entities to retain any existing assets and liabilities while transferring to a jurisdiction that is stable and rated favorably with international regulatory bodies….
So, in essence, the Marshall Islands offers companies the chance to redomicile to a tax-free, non-sanctioned and stable jurisdiction in a relatively simple and cost-effective way.
And not only that – Q Wealth’s internationalization associates are – for a limited time only – offering an incredible deal, wherein you can also be granted a free offshore bank account if you choose to re-domicile there.
If you’re interested in finding out more about the Marshall Islands as a company migration option – and the chance to obtain a free offshore bank account in the process – get in touch with our Front Desk and we’ll be happy to tell you more about it.
We’ll also soon be covering other options for redomiciliation, as well as some interesting options for international tax structuring for remote workforces.