Offshore Tax with HTJ.Tax

[ Offshore Tax ] Why Is Asset Protection Important?

Asset Protection is crucial for individuals and businesses to safeguard their wealth from unforeseen events like lawsuits, bankruptcy, or creditor claims. It involves strategies and structures that can help shield assets from these risks.

KEY IMPORTANCE OF ASSET PROTECTION

Lawsuits and Creditors: If you're involved in a lawsuit or face financial difficulties, asset protection can help prevent creditors from seizing your assets.

Business Risks: Businesses are exposed to various risks, such as lawsuits, regulatory actions, and economic downturns. Asset protection can mitigate these risks and protect the business's value.

Estate Planning: For individuals, asset protection can be a component of estate planning. It helps ensure that assets are passed on to heirs according to your wishes, without being unduly impacted by external factors.

Privacy: Asset protection strategies can also help maintain privacy, as they can make it more difficult for others to trace your assets.

COMMON ASSET PROTECTION STRATEGIES

Limited Liability Companies (LLCs): Forming an LLC can shield your personal assets from business liabilities.

Trusts: Trusts can be used to transfer ownership of assets to a trustee for the benefit of beneficiaries, providing asset protection benefits.

Insurance: Adequate insurance coverage, such as liability insurance or umbrella insurance, can protect assets in case of unexpected events.

Asset Allocation: Diversifying your assets across different asset classes can help reduce risk and protect your wealth.

Jurisdictional Planning: Understanding the asset protection laws in different jurisdictions can help you choose the most suitable location for your assets.

It's important to consult with a legal or financial professional to determine the most appropriate asset protection strategies for your specific situation. By implementing these strategies, you can safeguard your wealth and ensure that your assets are protected from unforeseen risks.

[ Offshore Tax ] Trusts and Asset Protection Key Insights.

A trust is a legal arrangement in which a person, known as the settlor, transfers assets to a trustee for the benefit of designated beneficiaries. Trusts offer several key benefits, particularly in the realm of asset protection.

Key Benefits of Trusts

Asset Protection: Trusts can effectively shield assets from creditors, lawsuits, and potential claims from ex-spouses.
Asset Protection Strategies with Trusts

Spendthrift Trusts: These trusts restrict a beneficiary's ability to sell or transfer their interest in the trust, thereby protecting the assets from creditors.

Dynasty Trusts: Designed to endure for multiple generations, these trusts help preserve wealth and avoid estate taxes.

Foreign Trusts: Establishing trusts in jurisdictions with strong asset protection laws can provide additional benefits.

Considerations and Challenges

Cost: The establishment and maintenance of a trust can involve legal fees and administrative costs.

Complexity: Trust structures can be intricate, making it essential to consult with a qualified attorney for guidance.

Tax Implications: The tax consequences of trusts can vary significantly depending on the jurisdiction and the specific structure of the trust.

Loss of Control: Typically, the settlor relinquishes control over the assets transferred to the trust, which can be a significant consideration.

[ Offshore Tax ] The Mauritius Advantage.

Mauritius has emerged as an attractive destination for high-net-worth individuals (HNWIs) due to a combination of factors:

1. Economic and Political Stability

Mauritius boasts a stable political environment, fostering confidence among investors.

The country has a diversified economy with a focus on finance, tourism, and technology, contributing to its economic stability.

2. Tax Benefits

Mauritius offers competitive corporate and personal tax rates, making it a tax-friendly jurisdiction.

The country has a comprehensive network of double taxation treaties, protecting investors from paying taxes twice on the same income.

3. High Quality of Life

Mauritius is renowned for its stunning beaches, lagoons, and natural beauty, offering a high quality of life.

The country enjoys a low crime rate, making it a secure place to live and raise a family.

Mauritius has good educational institutions and healthcare facilities, meeting the standards of international residents.

4. Investment Opportunities

Mauritius has established itself as a financial services hub, offering a wide range of investment opportunities, including offshore banking, insurance, and wealth management.

The real estate market offers attractive options for investment and residency purposes.

5. Immigration and Residency

Mauritius has streamlined its immigration procedures to attract foreign investors and residents.
The country offers pathways to permanent residency and citizenship for those meeting specific investment criteria.

6. Additional Factors

Located in a relatively stable region, Mauritius offers a safe haven for HNWIs seeking to diversify their assets and residency options.

The country has invested in modern infrastructure, including transportation, telecommunications, and utilities, ensuring a comfortable lifestyle.

While Mauritius offers many advantages, individual circumstances and financial goals vary. Consulting with a financial advisor or immigration specialist is recommended before making any significant decisions.

[ Offshore Tax ] Corporate Tax in Mauritius Nuances and Rebates.

Resident Corporations in Mauritius are subject to tax on their worldwide income, while non-resident corporations are liable for tax only on income derived from Mauritian sources, subject to any applicable double taxation treaty provisions.

Corporations are liable for income tax on their net income at a flat rate of 15%. However, companies engaged in the export of goods are taxed at a rate of 3% on the chargeable income attributable to exports, based on a prescribed formula.

Mauritius employs a credit system of taxation, whereby foreign tax credits are granted on any foreign-source income declared in Mauritius that has been subject to foreign taxes similar in nature to Mauritian taxes.

All corporate bodies incorporated in Mauritius, except for certain approved funds and associations, are subject to income tax. Income derived by local partnerships (resident sociétés) is shared and taxed in the hands of the partners.

Foreign corporations carrying on business or having a place of business in Mauritius, as well as Authorized Companies, are also liable for income tax on income derived from Mauritius.

For the purposes of taxation, a société refers to a société formed under any enactment in Mauritius, including:

a société de fait or a société en participation

a limited partnership

a joint venture

a société or partnership formed under the law of a foreign country

[ Offshore Tax ] Let's Talk About Foundations in Mauritius.

Trusts and foundations in Mauritius are taxed at a flat rate of 15% on their chargeable income, similar to companies.

Prior to July 1, 2021, certain trusts and foundations could file a declaration of non-residence with the Mauritius Revenue Authority (MRA) to be exempt from income tax for that year, provided specific conditions were met, such as the settlor/founder and all beneficiaries being non-residents or holding global business licenses under the 2007 Financial Services Act (FSA).

However, the Finance Act 2021 repealed the non-residence declaration, although existing trusts and foundations prior to June 30, 2021, can still benefit from this exemption until June 30, 2024, during a grandfathering period. During this period, no exemptions can be claimed for new assets or activities initiated after June 30, 2021.

Following the amendments, trusts and foundations will be considered non-resident if they are centrally managed and controlled outside Mauritius, as per Section 73A of the Income Tax Act (ITA). The MRA has outlined criteria for determining central management and control, which includes the residency of trustees/beneficiaries for trusts and the founder/beneficiaries for foundations.

Once a trust or foundation qualifies as a resident, it will be taxed on its worldwide income at 15%, but may claim an 80% partial exemption on certain income categories if substance requirements are met. Capital gains are not taxed due to the absence of a capital gains tax in Mauritius. Charitable trusts and foundations are exempt from tax.

Distributions to beneficiaries are classified as dividends, which are not subject to withholding tax. Resident individual beneficiaries are exempt on dividends up to MUR 3 million, with excess amounts subject to a 25% solidarity tax capped at 10% of leviable income. Non-resident beneficiaries are taxed according to their country of residence.

Resident trusts and foundations are subject to tax on their worldwide income, whereas non-resident trusts and foundations are liable only on income sourced from Mauritius.

To determine the residency of a trust or foundation, one needs to examine the test of central management and control. The determinants of central management and control are to ensure substance in the post-base erosion and profit shifting (BEPS) era.

Distributions made by a trust or foundation are termed dividends and there is no withholding tax on dividend distribution in Mauritius.

[ Offshore Tax ] Let's Explore the Personal and Corporate Income Tax Structure in Mauritius.

Mauritius has a favorable and straightforward tax system that attracts global investors. The key components of this tax structure include a corporate tax rate of 15%, which creates an appealing environment for businesses. Individuals benefit from a progressive income tax system, with rates ranging from 10% to 25%.

Value-added tax (VAT) is set at a standard rate of 15%, although certain sectors may enjoy reduced rates or exemptions. Notably, Mauritius does not impose capital gains tax, inheritance tax, or withholding tax on dividends, further enhancing its reputation as a tax-efficient jurisdiction.

This combination of low corporate tax, absence of capital gains tax, and various exemptions positions Mauritius as an attractive destination for international business and investment.

[ Offshore Tax ] How Can You Be A Citizen of Mauritius.

Registration of Commonwealth Citizens as Citizens of Mauritius

The Minister of Foreign Affairs may register any Commonwealth citizen of full age and capacity as a citizen of Mauritius upon application, provided the applicant satisfies the following conditions:

Good Character: The applicant must demonstrate good character.

Language Knowledge: The applicant must have adequate knowledge of English or any other language commonly used in Mauritius and understand the responsibilities of a citizen of Mauritius.

Residency: The applicant must have resided in Mauritius for five years or a shorter period (not less than twelve months) as accepted by the Minister in special circumstances, immediately preceding the application date.

Intent to Reside: The applicant must intend to continue residing in Mauritius if registered.

Additionally, the applicant must renounce any other citizenship held before being registered. The Minister may also register a Commonwealth citizen if it is deemed to be in the public interest.

[ Offshore Tax ] Let's Talk About Forming A Company and Work Permits in Mauritius.

Incorporating Companies in Mauritius

Mauritius offers a straightforward process for incorporating companies, which can be completed either online or by submitting the necessary documents to the Registrar of Companies. Before beginning, it's crucial to ensure the desired company name is available.

For online incorporation please register with the Mauritius Network Services.

To initiate the incorporation process, fill out Form 1 "Application for Incorporation of a Company" and submit it along with Forms 7, 8, or 9 if required.

The application form must contain the following details:

Proposed name of the company

Full names, former names, residential addresses, and service addresses of all directors and secretaries

Business occupations and directorships held by each director in public companies or subsidiaries. If a director serves on multiple subsidiaries within a single group, it suffices to state the holding company name followed by "group."

Shareholders' full names, residential addresses, service addresses, number of shares taken, and amounts paid

Whether the company is limited or unlimited, private or public

Registered office address

For one-person companies, the name of the secretary nominated by the proposed director to call a meeting of heirs in the event of the sole director's death

Business activities and location as per the Business Registration Act

A declaration confirming the truthfulness of the information provided

Full name of the applicant

The following documents must accompany the application:

A copy of the company's constitution, if applicable, certified by at least one applicant

Signed consent from each proposed director or secretary, confirming they are not disqualified from holding office

Signed consent from each proposed shareholder, indicating the number and class of shares taken and the amount paid for those shares

For companies limited by guarantee, a document signed by each member signifying their consent to be a member and the amount they undertake to contribute in the event of the company's winding-up

If documents are signed by an agent representing a shareholder or member, a proxy form authorizing the agent to act on their behalf

Upon receiving an application that complies with the Act and payment of the prescribed fee, the Registrar will:

Issue a certificate of incorporation

Enter the company's particulars in the Register

Assign a unique company number

Additional documents required for incorporation:

Original Certificate of Reservation (if any)

Photocopy of the passport for non-resident directors

Copy of the residence permit if the only director is a foreigner

Proof of the director's address (e.g., utility bill)

Proof of the secretary's address in the case of one-person companies

It's important to note that:

At least one director must be a resident of Mauritius
For companies holding a Category 1 or 2 Global Business License, incorporation is only effective after receiving approval from the Financial Services Commission

[ Offshore Tax ] Let's Talk About Global Banking in Mauritius.

Banking Services in Mauritius

Mauritius boasts a well-established banking sector that offers a wide range of specialized services, including:

Fund administration

Investment banking

Trusteeship

Structured lending

Structured trade finance

International portfolio management

Private client services

Treasury operations

In addition to these specialized services, banks in Mauritius provide traditional banking facilities, including card-based payment services.

For residents, having a local bank account is essential, especially if you are renting or purchasing property. A local account simplifies the management of payments and financial transactions.

Mauritius is also recognized as a global banking center, attracting non-residents with services tailored for private clients. Offshore bank accounts in Mauritius provide an established pathway for higher investment returns, making it an appealing option for international investors.

The banking sector in Mauritius is governed by the Bank of Mauritius, which ensures the safety and soundness of banks through a robust regulatory framework. This includes adherence to international standards such as Basel III for capital adequacy and liquidity coverage ratios.

The Mauritius International Financial Centre (IFC) is home to 19 local and international banks, offering services ranging from traditional retail banking to specialized financial solutions. The sector has a strong focus on global business, providing convenience, fiscal efficiency, and risk mitigation for companies engaged in international operations.

Key offerings include:

Individual banking services, such as savings and fixed deposit accounts in local and foreign currencies

Corporate banking, including cash management and financing solutions

Global business banking, with a focus on investment management

Trade finance services, including letters of credit and bank guarantees

Private banking and wealth management solutions
With a mix of local and international players, the Mauritian banking sector is characterized by high accessibility and a well-capitalized system. The two largest banks, Mauritius Commercial Bank (MCB) and State Bank of Mauritius (SBM), dominate the market, controlling a significant share of assets.

Overall, the banking sector in Mauritius is well-regarded for its governance, performance, and the variety of services it offers, making it an attractive destination for both residents and non-residents seeking banking solutions.

[ Offshore Tax ] Work and Live in Mauritius: Investor Scheme vs Self Employed Permit.

Move and Invest

A project will be considered under the Premium Investor Scheme if it involves a minimum investment of Rs 500 million in emerging sectors and innovative technologies.

To further open the Mauritian market to investors and foreign expertise, the Residency by Investment scheme has been established, requiring an initial investment of USD 50,000 or its equivalent in freely convertible foreign currency.

Additionally, under the Residency by Innovation scheme, investors in innovative start-ups must submit an innovative project to the Economic Development Board (EDB) or be registered with an incubator accredited by the Mauritius Research and Innovation Council (MRIC).

For self-employed entrepreneurs, the Residency for Self-Employed Entrepreneurs scheme mandates an initial investment of USD 35,000 or its equivalent in freely convertible foreign currency at the time of Occupation Permit (OP) issuance. Furthermore, applicants must be engaged exclusively in the services sector.

Lastly, for professionals, a minimum monthly basic salary of at least MUR 30,000 is required for those working in the ICT, BPO, pharmaceutical, manufacturing, food processing, fund accounting, and compliance services sectors. The maximum validity of the OP for professionals is 10 years.

[ Offshore Tax ] Discovering Mauritius: Residency by Investment.

Work in Mauritius

Occupation Permit (OP)

Holders of an OP or RP may be eligible to apply for a 20-year Residence Permit (RP), provided specific conditions are met.

The spouse of an OP holder can be granted an OP upon application.

Family Occupation Permit (FOP)

The applicant, their spouse, dependent child, parent, other dependent, or an approved person working exclusively for the family unit, can become resident for 10 years.

The applicant or their spouse can carry out any occupation in Mauritius for reward, profit, or employment.

The criteria is a contribution of USD 250,000 or its equivalent in freely convertible foreign currency to the COVID-19 Projects Development Fund.

Young Professional Occupation Permit

Mauritius is opening its job market to foreign students who have studied in a local tertiary education institution.

These individuals are eligible for a maximum 3-year OP.

Permanent Resident Permit (PRP)

A PRP valid as of September 1, 2020, shall be valid for 20 years.

[ Offshore Tax ] Has Singapore Overtaken Hong Kong?

Singapore and Hong Kong are often compared due to their similar roles as global financial hubs. Both cities offer unique advantages and challenges, and which one is "better" often depends on individual priorities.

Economic Environment

Singapore: Known for its political stability, efficient bureaucracy, and pro-business policies, Singapore emphasizes education, innovation, and technology.

Hong Kong: Historically a global financial center with a free-market economy, Hong Kong faces challenges due to recent political events and the implementation of the National Security Law, which have raised concerns about its future.

Business Environment

Singapore: The country provides a transparent and corruption-free environment, making it attractive for foreign businesses. It has a strong focus on intellectual property protection and serves as a hub for technology startups.

Hong Kong: Despite recent challenges, Hong Kong maintains a robust legal framework and a reputation as a global financial center. Its close proximity to mainland
China offers unique business opportunities.

Taxation

Singapore: Generally has a lower corporate tax rate compared to Hong Kong and offers various tax incentives for specific industries.

Hong Kong: Known for its historically low tax regime, recent changes have impacted its tax competitiveness.

In summary, both Singapore and Hong Kong have their strengths and weaknesses as financial hubs. The choice between them ultimately depends on individual business needs and priorities.

[ Offshore Tax ] Pre-Immigration Tax Planning Tips for Those Moving to Singapore.

Generally, you do not need to pay tax or report overseas income received in Singapore, including income deposited into a Singapore bank account.

However, there are specific scenarios where you would need to pay tax on overseas income such as the following:

Overseas income received through partnerships based in Singapore.

Overseas employment related to your Singapore employment (e.g., you need to travel abroad as part of your job).

Operating a trade or business in Singapore that is related to an overseas trade or business transaction.

Working in Singapore for a foreign employer.

Being employed overseas on behalf of the Singapore Government.

(Inland Revenue Authority of Singapore)

[ Offshore Tax ] Thoughts on Singapore's Irrevocable Trusts.

A Singapore irrevocable trust is a legal arrangement in which the settlor, transfer ownership of assets to a trustee for the benefit of designated beneficiaries. The term "irrevocable" means that you cannot change your mind later and reclaim ownership of the assets placed in the trust.

KEY CHARACTERISTICS OF A SINGAPORE IRREVOCABLE TRUST

Benefits:

1. Asset Protection: Assets placed in the trust are generally protected from the creditors of the settlor, potentially shielding them from lawsuits or bankruptcy.

2. Tax Planning: Depending on the structure of the trust, it may offer some tax advantages, such as reducing estate duty or income taxes.

3. Succession Planning: The trust allows you to control how assets are distributed to your beneficiaries after your death. This can help avoid probate and ensure your wishes are followed.

Considerations:

1. Loss of Control: Once assets are transferred to the trust, you relinquish control over them. The trustee manages the assets according to the terms of the trust deed.

2. Cost: Setting up and maintaining a trust can involve legal and administrative fees.

3. Tax Implications: While there may be some tax benefits, it is crucial to seek tax advice to understand the potential tax consequences for the settlor, the trustee, and the beneficiaries.

[ Offshore Tax ] What Attracts High-Net-Worth Individuals to Singapore.

Singapore offers numerous advantages that make it an ideal location for businesses seeking to establish a regional headquarters or expand into the rest of ASEAN and Asia.

The country's primary working language is English, and its international business policies and practices align closely with global norms. At the same time, Singapore maintains strong cultural and linguistic connections with neighboring ASEAN countries. This unique blend allows its labor talent pool to effectively serve as intermediaries for regional and global business activities.

Utilizing Singapore as a hub provides several benefits, including:

Rapid Entry into the Region: Streamlined business processes facilitate quick market entry.

Comprehensive Regional Trade Agreements: These agreements enhance trade opportunities and reduce barriers.

Competitive Corporate Tax Landscape: Singapore offers attractive tax rates and incentives for businesses.

Strong Talent Pool: The country is home to a diverse and skilled workforce.

Intellectual Property Protection: Singapore is recognized for its robust strategies in protecting intellectual property, making it a favorable environment for innovation.

Overall, Singapore's strategic advantages make it an excellent choice for businesses looking to thrive in the Asian market.