Starting and running a business in your home country is safe, but “safe” is never good enough for ambitious entrepreneurs. If you’re ambitious, penetrating new international markets must be at the top of your agenda. You have to take risky gambles in order to succeed in business. Though risky to start, incorporate your business offshore can open up new market possibilities, a larger target audience, new business experiences, and more steady income streams.
What to consider?
Here are a few considerations to make before deciding which country to incorporate your business:
- Taxation: What tax relief provisions does the country offer, and how do they benefit investors? How does income tax impact your employees’ overall remuneration? Are there capital gains liabilities that could impact your business’s profitability? Does the country have a Double-Tax Agreement (DTA) with your country to shield you from double taxation?
- Paperwork: How much paperwork (licenses and other legal documents) is involved?
- Labour market: How rich is the local labour market? What’s the cost of hiring and retaining human capital? How straightforward is the process of firing employees in case of downscale or getting rid of deadwood? How easy is it for your foreign employees to get work permits?
- Residency requirements: Do the country’s business laws require you to relocate to the country before registering your business?
- Payment method: Are recognized payment aggregators available in the country? You should avoid forcing yourself to use unfavorable local payment processors that may not inspire confidence in business partners.
- Regulation environment: What are the laws surrounding corporate governance? For example, how easy are the regulations regarding mergers and acquisitions should the need arise to sell, merge, or o float the business down the road in the future?
- Country’s politically and economically stability.
- Availability of suppliers and customers.
The US is the global leader on so many fronts. Firstly, its citizens have a higher-than-average purchasing power. Secondly, it boasts a stable economy with vast potential for tech adoption. Moreover, being the world’s largest democracy, the country is more politically stable and progressive. Lastly, the country possesses with a culturally rich labour market which is made up of people of all kinds of races, religions, and sexual orientations.
All the factors above combine to create a thriving environment that supports business growth. However, the United States has 50 states each operating somewhat independently. Each state has its own policies and regulations for foreign investors, especially regarding tax incentives for foreign investors. Therefore, it may require some time to explore different states and determine the most advantageous one for your business goals.
Switzerland stands out for its economic and political stability. The country is also very accommodating, which is why it hosts many refugees from across Eastern Europe. This creates an ideal environment for sustained business growth.
Despite being a small landlocked nation, Switzerland actively promotes foreign trade with low import duties, minimal quotas, and a reputation for favourable corporate banking services, generous grants, and tax incentives. Notably, capital gains taxes, value-added taxes, and corporation taxes all sit below 8%, a significantly lower rate compared to most Western countries. In addition, the incorporation process in Switzerland is remarkably efficient, allowing you to complete all necessary steps within a week.
For those looking to establish a foothold in the world’s fastest-growing economic bloc, Singapore must be your starting point. Here’s why: Firstly, the country has DTA agreements with more than 50 western countries. That makes it the perfect getaway for western businesses. Secondly, the country operates under strict and comprehensive business laws that foster an ideal business environment for foreign businesses to thrive. Furthermore, incorporating a company in Singapore is rather straightforward. There are specialized local firms that help you handle paperwork. You can also complete the entire process online without the need to visit Singapore in person.
Singapore offers additional advantages, including no capital gain taxes in Singapore, advanced communication and transportation infrastructure, high-speed internet access. Also, the country is home to the region’s best seaport and container ports. All factors above created a solid foundation for businesses to grow and prosper in Singapore.
4. Hong Kong
Incorporating a business in Hong Kong is effortless, not to mention the unlimited business perks that the city has to offer. For starters, Hong Kong presents a ready market of nearly 7.5 million affluent individuals. Most of these people are in the upper middle class and have expensive tastes. Secondly, Hong Kong allows foreign businesses to register through e-registration, ensuring a seamless and convenient application process. What is more, compared to mainland China, Hong Kong has fewer restrictions on foreign businesses. The tax regime in Hong Kong is reasonably favourable, with no sales tax or capital gains taxes to worry about, for example. Lastly, Hong Kong has allowed payment aggregators such as Stripe and PayPal, simplifying international transactions.
Panama is home to over 70 international banks that allow foreign investors to move money around the world without being watched by prying eyes. Panama guarantees you and your business partners maximum confidentiality and anonymity in all your business deals. The country is also economically and politically stable and safe. Additionally, Panama doesn’t charge foreign businesses any corporation tax for transactions made outside the country.