This section makes a comparison between the Mauritian Global Business Sector with those of Seychelles, Hong Kong and Dubai. An important thing to mention is that Seychelles has two types of offshore companies, the Special Licensed Company (CSL) and International Business Corporation (IBC), which has been modelled on Mauritius Global Business after seeing the success of Mauritius Financial Services sector.
With the rapid changes in financial sector across the world in the last three decades, OFC were mushrooming at a fast rate worldwide. In order not to lag behind in this changing business trend, the Seychelles also embarked upon the Global Business. The most commonly used offshore instrument in the islands is the International Business Company which is governed by the International Business Corporation Act 1994. Other offshore vehicles include the International and Free Trade Zone Companies Trust, each having its own specificities.
There are two types of offshore company available in Seychelles, namely the Special Licensed Company (CSL) and the International Business Corporation (IBC).
THE SPECIAL LICENSED COMPANY (CSL)1
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The Special licensed company of Seychelles is modelled on the Mauritius GBC1 which was the key for attracting massive investment from India. The CSL was designed in a view to be the better version of the Mauritian's GBC1 with easier incorporation of companies, lesser costs and more favourable tax regime. However, Mauritius has far more double tax treaties than Seychelles, 35 as compared to 15, giving Mauritius a cutting edge advantage over Seychelles. A more detailed comparison is made in table
Highlight of the Special Licensed Company:
CSL is liable to a tax base of up to 1.5% on its income.
Exemption from any Withholding Tax when clients repatriate dividend, interest and royalties and stamp duties on ant property or share transfers and transaction from countries where Seychelles has concluded DTA treaties.
Very little Physical Presence is needed when incorporating in Seychelles. The Company is only required to have a Registered Office along with a Local Secretary and two Local Directors (which can be Nominees)
A full business plan and considerable personal details have to be submitted to the Seychelles International Business Authority who has ensured secrecy of the information from the public and any foreign government by passing a strict secrecy provisions in the law.
Unlike IBC, CSL is permitted to operate within Seychelles, very helpful for international businesses wishing to set up a customer support services, logistics and administrative services in Seychelles
Seychelles' International Business Company:2
The Seychelles' International Business (IBC) is similar to the GBC2 of Mauritius, offering almost the same services with very little alterations as shown in table.
Under the international Business Corporation Act 1994, a minimal procedural steps and a maximum of flexibility is offered to investors. The following lists some of the key points of this legislation:
ZERO TAX: Completely tax free offshore corporation but is subject to some requirements; No business may be transacted with residents of the Seychelles for activities such as professional contacts with lawyers, accountants and may not own real estate in Seychelles.
Number of director and shareholder required is one.
Director, shareholder and officers may be of any nationality and it is not necessary for them to be residents of the Seychelles.
Meeting of the shareholders and directors can be held anywhere outside the Seychelles and even by telephone.
Only the Memorandum and Articles of Association are held in public record. Details about beneficial owners and shareholders are not held as public record.
No minimum capital required
No need to keep accounts
Special licenses are required to trade in insurance and re-insurance, for banking and trusts businesses, etc.
Competitive Government license fees of $100 and fast incorporation (within 24h)
Though the Mauritian offshore sector can be termed "older" than the Seychelles one, the latter has got some advantages (from the point of view of the investors) over the Mauritian Offshore sector. Some of them are as follows:
There is no obligation to hold meetings of shareholders in the Seychelles; but in Mauritius it is a legal obligation to do so or to pass resolutions as to matters to be discussed in the meetings. The same applies for meetings of directors.
Always on Time
Marked to Standard
There is an obligation to name at least one director during application for registration or amalgamation proposal in Mauritius; but in Seychelles, directors may be appointed by resolution on the first board meeting itself.
Hong Kong is a famous financial centre ranking 3rd on the international scene, the two leaders being New York and London. Its GDP per capita exceeds that of Britain, Canada and Australia.
There is no legislation for offshore as such in Hong Kong. Incorporation of companies is made under the Company Ordinance and it is territorial approach which is used to determine whether to refer to a company as offshore or not.
If NO business is undertaken in Hong Kong and NO income is generated from Hong Kong sources, then the Hong Kong based company is not taxable in Hong Kong. In other words, any Hong Kong entity doing business outside Hong Kong is an offshore company.
Some Advantages of the Hong Kong Offshore Companies
Being the 9th largest economy and the 11th largest exporter of services in the world, Hong Kong is bound to have a competitive edge over the Mauritius offshore sector. Some of the advantages for investors to choose Hong Kong to do business are:
- Shareholders and directors meetings can be held anywhere in the world.
- Offshore funds are tax exempted as per the Revenue (Profit Tax Exemption for Offshore Funds) Ordinance 2005 passed in March 2006 whereas in Mauritius Global Funds are still subject to taxes
- Hong Kong has excellent communication facilities as compared to Mauritius.
- Salaries are taxed only on income "arising in or derived from a Hong Kong employment".
- Availability of shelf companies.
The popularity of Dubai as a jurisdiction for the incorporation of offshore International Business Companies is growing although the offshore sector is a relatively new one there. Over the last few years, considerable legislations have been passed so as to help assist in making the country one of great repute in the domain. The Dubai Airport Free Zone and Dubai Media City are the key locations offering 'offshore' option to foreign operators.
Some possible reason why investors may choose Dubai
-Dubai is a 'no tax' emirate and also no exchange of information agreement has been signed up. Thus, there is possibility of high level of security, privacy and asset protection.
-No corporate income taxes except for banks and oil companies operating out of Dubai.
- Property may be held in Dubai by the offshore companies.
- Secrecy of information: no public record of a company's directors or shareholders in Dubai and also with no taxation department, there is certainty that the personal and business activities of the company's main personnel are kept in confidentiality in Dubai.
As we can see from the above, each jurisdiction has its own particular way of carrying out offshore activities with each having its advantages. The next chapter is the concluding chapter with some possible suggestions so as to make our Global Business sector more competitive and attractive vis-à-vis other countries.