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The CIS countries and offshore operation

The application of schemes including offshore companies during the planning of foreign trade activities of your company represents the most legal and quite lawful way for minimizing expenses on taxes. The word «scheme» means adequate and competent tax decisions that you can use for conducting your business.

Depending on the specificity of business, the kind of activity of the company, and the currency and tax laws of the considered country, one can minimize income tax, tax on dividends, royalty and a number of other taxes. For example, one can transfer income from countries with high income tax can be transferred to the territory with lower income taxes up to «zero» or minimum rate.

Besides tax optimization, the creation of offshore companies or other nonresident structures (companies that are in jurisdictions with low taxes or onshore companies) provides a number of advantages which allow owners of the businesses to be more rational in the structuring of their business processes.

These advantages include:

  1. Protection of assets. Transfer of assets to politically and economically stable jurisdictions, protection from raiders’ attacks, stocking of free money resources, registration of real estate objects and trademarks represent only a small part of advantages that can help your company protect its assets and savings. Besides, the assets become regulated by the principle of limited liability which assures owners of their safety.

  2. Preservation of the information confidentiality. In many countries information about the owners of a company is confidential and cannot be provided to a third party (Belize, Seychelles islands, and the British Virgin Islands). However, in other countries there is a possibility to obtain information about the directors and founders of the companies (for example, on Cyprus). Therefore, to preserve confidentiality of information one can use the so-called «nominal service» when a «nominal director» and/or «nominal shareholder» help to keep proprietors of the business confidential. In this case, the English right system is applied, helping to hide the actual proprietor and to conduct judicial procedures outside of the company’s own jurisdiction.

  3. Entering international markets. Upon registering an offshore company (or purchasing a ready offshore company) businessmen gain access to trade in international markets and to cheap credits. There exist many options for benefiting from the use of an offshore company when working abroad (trade operations, leasing, insurance, registration of sea and aircraft vessels, investment activity, and so on).

To achieve these purposes, the work of lawyers on structuring your business can be divided roughly in two parts:

Creation of offshore schemes («offshore circuitry»). All cases are different, each type of income paid in certain jurisdiction demands preliminary analysis from the point of view of the corresponding tax and currency legislation of the considered jurisdiction. The CIS countries have various agreements to avoid double taxation. Therefore the creation of schemes is based on the understanding of practical subtleties of the interaction of business of the considered country (Kazakhstan, Ukraine, Russia, Uzbekistan, Kyrgyzstan, Moldova, Armenia, Azerbaijan, Georgia, Latvia, Lithuania, Estonia) with offshore or onshore jurisdictions.
Registration of the offshore companies. Depending on the country of the founder and the chosen scheme, we will help you register a company in the optimal country, pay the state duty, fill documents, and open bank accounts. As time goes, to ensure uninterrupted operation of the company, our experts can facilitate the functioning of a «virtual office», payment of annual duties, submission of tax and accounting reports, and the solution of other questions related to the company document circulation (obtaining apostilled documents, assignment of VAT numbers, obtaining residency certificates, and so on).

Hong Kong
British Virgin Islands
Cayman Islands
Great Britain LLP, LTD
Delaware (USA)

We can offer you consultations on possible schemes of operation of your company and taxation optimization depending on the type of your business and the country of operation (Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Kyrgyzstan, Moldova, Armenia, Azerbaijan, Georgia, Latvia, Lithuania, and Estonia). Consultations on offshore operation can be provided in both oral and written form. Also we can evaluate your current offshore scheme for its legitimacy and optimal use.

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Personal income tax:  20%.
Corporate income tax:  No tax as standard, except banks which are levied at 10% on their regulated business. Investment funds can still apply to be exempt companies.
Exchange restrictions:  None.
Tax treaties:
  34 treaties in force.

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Personal income tax: 21%.
Corporate income tax: no tax on undistributed profits, 21/79 on distributed profits and dividend.
Exchange restrictions: None.
Tax treaties: Yes.

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Personal income tax: Choice between allowance — based (17 — 40%) and gross income-based (up to £25,000 : 20%;
£25,001 — £100,000 : 30%; over £100,000 : 40%) ; special tax residence schemes for high-net-worth individuals and high executives possessing specialist skills.
Corporate income tax: 33% (20% for small companies); low flat rate of tax across the board of 10 -12% is introduced.
Exchange restrictions: None.
Tax treaties: Under negotiation.

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Hong Kong

Personal income tax: 15% (max)
Corporate income tax: 16.5%.
Exchange restrictions: None.
Tax treaties: PRC, Belgium, Thailand, Luxembourg

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British Virgin Islands

Persona income tax: No tax
Corporate income tax: No income (profit) tax. Payroll tax — resident companies: 10% or 14% (employees: 8% fixed employers: 2% or 6% depending on business size). Non-resident companies: same as resident, on BVI-based employees only.
Exchange restrrictions: No
Tax treaties: Japan, United Kingdom, Switzerland

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