Top 5 Offshore Jurisdictions in Asia

Asian region, particularly Central Asia, is said to be the emerging destination for offshore company formation and banking – thanks to the ongoing scrutiny toward major 'tax havens,' such as Switzerland. As economists indicate that wealth transfer from the Western to the Eastern world is ongoing right now, banks in the region are more than ready to capture new clients from the United States and other regions.

When it comes to offshore banking and company formation in Asia, there are two names that always come up on top of the list: Hong Kong and Singapore. Those are more than worthy to make the list, but there are other regions that investors should learn more about.

This post will shed some light on top offshore jurisdictions in Asia to help investors to consider their options.

Hong Kong

Hong Kong is the all-time favorite when it comes to establishing a headquarters. As a first class financial center with a stable political environment, Hong Kong offers more than just a low corporate tax rate (at 16.5 percent): Reputation.

Banking-wise, Hong Kong banks are known as some of the best offshore banks in the world. On the downside, they don't really need your money. Furthermore, due to the pressure for transparency, they're now stricter than ever to open a bank account for a non-resident. Along with a large sum amount of money as the initial deposits, clients are automatically categorized into a certain group (read: wealth level).

If you have limited amount of money to invest, it's better for you to setup a company in Hong Kong and bank elsewhere – Panama, Cyprus, Puerto Rico, etc.

Singapore

Similar to Hong Kong, Singapore has successfully established itself as a first class financial center with a strong business/finance sector and a stable economy and political environment. Also like Hong Kong, it's not popularly known as tax haven; however, with a corporate tax rate of 17 percent, it's considerably lower than other jurisdictions, for example, United States (39 percent) and France (34.4 percent.)

In banking sectors, Singapore is open to non-resident account holders. However, just like any other popular offshore banking jurisdictions, Singapore is becoming progressively stricter than ever - “thanks” to the pressure of the neighboring countries.

Malaysia (Labuan)

Malaysia is not generally known as a tax haven, but Labuan, a federal territory of Malaysia, is indeed a tax haven. It's designated by the Malaysian government as an International financial center back in 1990.

With 3 percent corporate tax, setting up a company in Labuan is very attractive. Just like most other tax havens, Labuan doesn't tax income generated outside the jurisdiction.

Bahrain

Located in the Persian Gulf, it's actually a country in the continent of Asia. Its lack of oil reserves has forced itself to find other revenue generating sector, namely the financial service sector. While forming a company in Bahrain is expensive, its zero corporate tax is attractive to investors and business owners.

Banking-wise, Bahrain is not popularly known as an offshore banking destination. Particularly due to the strict requirements for non-residents, let's just say that offshore banking is off-limit from the region.

Qatar

Just like Bahrain, Qatar is surrounded by the Persian Gulf, and a country in the continent of Asia. And just like Bahrain, Qatar is attractive, tax-wise. With 10 percent corporate tax, its among the world's lowest.

Qatar's upside is the banking sector: It has a strong secrecy, and it's gradually opening up to international investors. Perhaps the downside is a bit of a turn-off: Although it's economically and financially strong, the jurisdiction has a sub-par reputation when it comes to human rights, which should be a consideration if your plan with your assets include moving to Qatar as an expat.

Takeaway

As you may have learned from the list above, other than Hong Kong and Singapore, other offshore jurisdictions in the Asian region have a lot to do to catch on. Indonesia, for example, is progressively taxing companies up to a low-ish 20-25 percent. However, the bureaucracy and somewhat unstable political environment have turned investors off. Thailand is quite similar. Rules and regulations change quickly – so, perhaps there will be new, emerging offshore jurisdiction (perhaps China's Woody Island?) that will join the popular jurisdictions? Only time will tell.

One thing for sure, you need to do your due diligence. Learn about the jurisdition, and if you're unsure of what to do, as always, you should consult your trusted lawyer. We can also help clearing the mist for you – just contact us.