International tax savings

International anti-tax avoidance has entered a new era of "double C"!

First, CRS is leading the world into a new era of international tax transparency.

Second, the previous tax avoidance methods of controlled foreign enterprises (CFCs) were blocked by the anti-avoidance provisions of China's new income tax law for individuals, which came into effect on 1 January 2019.

In recent years, the Cayman Islands, the BVI Islands and other countries have successively issued ES codes of economic substance laws, which has shrouded the past offshore companies in tax avoidance.

1. Utilize offshore companies in different regions for tax savings

At present, there are three types of offshore centers:

One is that no corporate or personal income tax is levied, but it is replaced by property tax and customs duties, such as BVI, Cayman Islands, Bermuda; For example, Hong Kong and Singapore, China, are taxed at the normal interest rate for income tax from the local area, but less or no income tax is levied on income tax from places other than the place of incorporation, and there is no turnover tax, which provides favorable conditions for foreigners who set up companies in the local area and make profits from overseas.

2. Take advantage of bilateral tax treaties and related tax incentives

The main purpose of the tax treaties signed between the two countries/regions to coordinate the distribution of tax revenue between the two countries is to eliminate the double taxation of cross-border enterprises when conducting business in the two places, and at the same time to achieve the purpose of stabilizing tax treatment, appropriately reducing tax rates, and preventing tax evasion. For enterprises, they can use the specific content of their agreements to make certain changes

(1) Establish different types of offshore companies according to different business/needs

①Financial companies

By establishing a financial company abroad, and then when the enterprise purchases some securities investment or purchases real estate, the funds can be passed through the financial company to reduce a certain amount of tax payment.

②Investment companies

Investment companies can generally be divided into three categories, one is an investment company established by a group, one is a private investment company, and the last is an offshore fund company.

③Service companies

Establishing a service company abroad can be remunerated by the service company, thus avoiding corporate income tax imposed by high-tax countries.

④Trading company

The establishment of a trading company abroad can be used for international transactions, and the opportunity to obtain tax reductions can be obtained by introducing foreign companies in the company's foreign international trade.