Generally, 90% of offshore tax-free companies are used as overseas investment. The types of company usually are IBC (International Business Company), Exempt Company and LLC (Limited Liability Company). Typically, the offshore companies are without physical presence & management in jurisdictions, but bank A/C can be opened in local country and its income is from overseas market. Or the so-called Non Resident A / C, External A / C or an OBU A / C also can be opened in HK or Singapore. Therefore, the tax-free status can be achieved in most popular offshore jurisdictions such as Brunei, BVI, Bahamas, Bermuda, Belize, Cayman, HK, Panama and Samoa. Offshore companies are widely used by Taiwan investors to set up manufacturing plants, rep. offices and bonded trading companies in Mainland China. Besides, it can be used for international trading.

Big companies or IPO companies seek for lower tax burden arrangement, because their business activities always involve a vast amount of money and require disclosing their financial status to the public. This situation is required an internal financial controller with rich experience and accounting background to understand their investment structure. These large-scale companies with more resources and sophisticated planning can gain profit from the double tax treaty more easily than the small ones. As a result, when individuals or small companies decided to establish manufacturing plants overseas or in China, most of them would prefer to use the ordinary tax-free company without disclosing financial status and enjoy the same benefits of the Tax Treaty. For profits or consultation fees earned from overseas, when the dividends, royalties and consultation fees are remitted, certain amount of withholding tax needs to be paid. The tax rate is 30% in America; 20% in Mainland China if the parent country has not signed DTT - Double Tax Treaty with these countries, on the contrary, the rate for withholding tax could be as low as 10%, 5% or even 0%. It is very important to select an offshore jurisdiction with low tax rate (around 3%) for overseas investment. The best-known jurisdictions are Labuan (administered by the federal government of Malaysia), Cyprus (joined the European Union), and Madeira Island of Portugal, they all have signed DTT with China. Labuan Company is tax-free for Non-Trading investments (such as manufacturing plants). Yet, for trading revenues, for instance, royalties or consultation incomes need to pay either 3% corporate tax or a fixed amount of 20,000MYR (approx. 5,980USD). You can choose either one, which is less. Most of the CPA firms or consulting companies do not involve in this field, nor have any relative experiences, they are incapable for dealing with tax planning of this type. So they will simply recommend BVI or Belize, where the arrangements are easier. Since only top-class tax consultants are familiar with DTT tax arrangements, there is no way for ordinary tax advisor to learn about the Tax Return and the procedures. Even professional company such as Power Point Management, which has already set up direct office in Labuan, only a few of deputy general managers are familiar with the entire structure. In another word, the tax arrangement of this level is just like Rolls Royce or Benz in the automobile industry, or as the heart and brain surgical operations.

Before making investments in China or any other country, we should conduct market survey before sign any contracts. For example, factory or office building rental contract, investment intention contract, trading or other contracts. A businessman uses the parent company to sign a contract without knowing the consequences, if there is any change or great loss to him, he will have to bear unlimited liabilities and the parent company will be completely liable for all overseas legal action. But if these contracts were signed under the name of an offshore company, the result will be completely different. As for offshore company it only pays nothing but a little harm to its fame, which is exactly the fire wall to protect the reputable parent company from lawsuit and great amount of compensation. Doing business is as same as fighting in a battle. In business, an offshore company can bear all the risks, and protects the parent company from potential dangers and traps.

Almost 100% of these offshore jurisdictions do not regulate the deadline for deferral of reserved profits, while most countries do not tax on the reserved profits for the offshore companies. America is the first country to address this issue with a political point of view in the presidential campaign. Normally it takes 10 to 20 years for a government to probe into this issue. The offshore surplus of American increases from USD 403 billion in 1999 to USD 639 billion in 2002. As for contacted clients when American exploits overseas market, except for Shanghai's Buick or Dongguan's Wal-Mart, Companies that operate Call Centers in India and Philippines or set up plants abroad then sell goods back to States, their overseas gains need to be remitted to America for taxation. It goes without saying for those American companies set up in Bermuda or Cayman which are also subject to the taxation. In Kerry's proposed taxation, a special one-year Tax Holiday for those overseas gained. If these overseas gains are remitted back to the States and invested for employment creations, only a 10% tax will be levied. Of course, the requirement for carrying out this taxation is that Kerry triumphs over President Bush and indeed amends the current legislative bills.

If you use offshore holding companies to invest abroad for setting up factories, rep. offices or trading companies, you can enjoy the benefits of the followings: tax free, lower tax, limited liability overseas and profit deferral without deadline.

Most investors use a tax-free offshore company to act as the intermediary for Invoice & Packing List. They purchase goods from China or Vietnam and then sell them to America or Japan. Most of profit can be in offshore company; this helps them to strengthen the competitive power in price in the international market.

Using an offshore company instead of parent company to set up foreign branch or rep. office is the best way to reduce investment risk overseas. Once there is any change or loss to your investment, offshore company is the fire wall for you to leave with minor damage.

Holding companies incorporated in Bermuda or Cayman Islands are easily to be listed on the offshore exchange market in HK, S' pore or Malaysia, among which, Labuan in Malaysia is the most favorable. Besides, offshore companies can also be listed on NASDAQ in America.

Real estates owning by an offshore company can be sold easily by changing its shareholders. There is no trouble from stamp duty and tax of property gain. Your privacy is well protected as well as saving time and cost during transactions.

The same as purchasing real estates overseas, using an offshore company to purchase offshore stocks / funds / bonds avoids disclosure of the name of individual or parent company. All the transactions were nominated and you are protected from tax issue of personal income and inheritance tax.

Using an offshore company to possess trademark / patent / royalty overseas is not only exempt from income tax, but also avoid any law or tax disputes of the parent company. Furthermore, you can register your company in Labuan (Malaysia), making use of DTT to enjoy the tax incentive of reducing tax rates by 50% or even more.

Using an offshore company to sign consulting or performance contract, the income tax will not be levied on individual. Under sophisticate arrangement to meet the requirements, more tax benefit can be enjoyed under the DTT agreement.

If you register ships in tax-exempt offshore jurisdictions, the fixed annual license fee of each ship can be as low as the offshore company. So the ships can enjoy tax exemption on gains and can also sail around the world without suffering from political disturbance.

Many good and cheap insurances policies are offered in offshore jurisdictions such as Bermuda and Cayman. Use your offshore company to buy global insurance with lower price and better quality.