How a Non-Resident Domestic Corporation
("NRDC") in the Marshall Islands can add value
to your business?
An importing or exporting company
Asia International Trading Company
Intellectual Property
Independent Consultants and Contractors
Investment Portfolios
Property Owning Companies
Holding Companies
Shipping Companies
Following cases are for information purposes only, please
read our
disclaimer carefully,
especially on the information as listed below. Please
also note that scenerios & laws may change as time
goes, client is advised to consult his/her professional
advisers and accountants before taking any decisions.
An importing or exporting company
An importing or exporting company might establish a
NRDC in the Marshall Islands (i.e. offshore) company.
The NRDC would take orders directly from the customer,
but have the goods delivered directly to that customer
from the manufacturer or place of purchase.
The profits arising out of the difference between purchase
price and sales price would then be accumulated in either
a tax free or low tax jurisdiction. With such trading
companies, it is important to choose an offshore area,
or at least an operational base, which has good communications
as shipping and other documentation may be critical
to the scheme.
Asia International Trading Company
A NRDC in the Marshall Islands is an excellent vehicle
through which international trading can be conducted
while accumulating tax free profits. A properly structured
NRDC can legally receive profits without being subject
to corporation tax, even if the corporate bank account
is in Hong Kong.
This type of trading structure is most beneficial to
those who trade goods and provide consulting services
in different Asian countries and it can be shown that
the profits from the sales arose outside of the home
jurisdiction of the business.
Intellectual Property
Intellectual property, including patents, certificates
for computer software, trademarks and copyrights can
be owned by or assigned to a NRDC. Upon acquisition
of the rights, the NRDC can enter into license or franchise
agreements with companies interested in using those
rights.
Independent Consultants and Contractors
Many individuals working overseas, particularly in the
professional services such as engineering, computers,
construction, aviation, finance, film and entertainment,
prefer to have their offshore company employ them. A
NRDC enters into the contractual arrangement with their
overseas employer. The company ownership can be in bearer
share form (subject to the bank account opening requirments)
and the individual is provided with a full Power of
Attorney to arrange such contracts.
A NRDC invoices the overseas employer and the funds
are deposited in a Hong Kong corporate bank account.
The individual accesses the bank account via internet
etc.. Funds can also be sent to local bank accounts.
This arrangement avoids any difficulties with local
currencies, exchange controls or other local restrictions.
Also, the fees earned can accumulate offshore, free
from taxation.
Investment Portfolios
Both large companies and individuals regularly use a
NRDC as a mediator to hold investment portfolios, which
may consist of stock, bonds, cash and a broad range
of other investment products. Cash assets held by offshore
companies earn deposit interest gross or can be placed
in collective cash funds.
Funds accumulated through a NRDC can be invested or
deposited throughout the world and whilst generally
returns or interest payable in respect of these funds
will be subject to local taxation, there are a number
of offshore areas in which funds may be placed either
in tax free bonds or as bank deposits where interest
is paid gross. Similarly, the Marshall Islands assess
no capital gains taxes. Use of a NRDC allows the possibility
of investing tax efficiently in a high tax country where
there is a concessionary tax treaty in respect of investments
made by companies incorporated in the offshore country.
Property Owning Companies
There are great advantages in using a NRDC for the purpose
of holding an overseas property. Advantages include
minimizing inheritance tax and capital gains tax. In
addition, ease of sale which is achieved by transferring
the shares in the company rather than transferring the
property owned by the company and reduction of property
purchase costs to the onward purchasers, particularly
relating to stamp duty.
Taking the example of investment in property in the
United Kingdom by a NRDC, use of an appropriate offshore
vehicle can offer relief from income tax, capital gains
tax and inheritance tax. It should be remembered, in
particular, that when a non-resident company disposes
of a property investment, no capital gains tax is charged
and holding through an offshore company removes the
application of inheritance tax which would apply if
a non-domiciled investor held a UK property in his personal
name.
Holding Companies
If the holding company is situated in an offshore area
where there are no income or corporation taxes and no
requirement that dividends must be paid, then the profits
which are accumulated in the tax free climate can be
used to fund the requirement of subsidiaries or reinvested
as business convenience suggests.
Use may be made of a NRDC to fund the operation of subsidiaries
in various countries so that the subsidiaries obtain
the benefit of tax deductions on interest paid. A NRDC
may hold investments in subsidiaries and/or associated
companies, publicly quoted and private companies, as
well as joint venture projects. Capital gains arising
from the disposal of particular investments can be made
without crystallizing taxation liabilities.
Shipping Companies
The use of offshore shipping companies can eliminate
direct or indirect taxation on shipping. Shipping companies
may own or charter ships, the profits from which activities
can be accumulated tax free. Tax and legal requirements
generally dictate that the offshore company owning a
shipping vessel should be incorporated in the jurisdiction
whose flag the ship flies.
The Marshall Islands is the world's premier ship registration
jurisdiction, with low registration fees and exemption
from tax on income derived from shipping and chartering
activities. Furthermore, nearly all shipping companies
that are traded publicly on the New York Stock Exchange
or the Nasdaq are Marshall Islands companies.
Our aim is to provide a comprehensive service to our
clients in offshore operations. If you find above helpful,
please free to contact us.
