Where In The World Should I Incorporate?
Tax minimization for international operations depends on your citizenship, the location where income and assets are likely to be, the supply chain you need to work with and location of your customers, and the political and regulatory aspects of asset holding and account reporting.
US organization of international business entities is reasonable for asset protection (DE and other states, for instance, allow organization as a trust so no owner information is made public), for low local and federal tax on initial income, and for good banking and legal systems, as well as access to capital. If you are a US citizen, US organization, possibly in tax advantaged forms like a Domestic International Sales Corporation, may make most sense, since individual income taxation is incurred on a worldwide basis, and annual reports of bank accounts and international income will, in any case, be required.
US organization of the holding entity may make less sense if you are a non-US citizen. Foreign source income may, in that instance, be subject to US withholding requirements and to US entity level income tax incidence, even though solely from international ventures. By contrast, international tax havens like Dubai, the Mauritius, Hong Kong, and multiple British crown colonies offer stable political and banking environments with no taxation beyond entity formation fees for internationally sourced income. Local capital requirements can also be minimal, and there are reliable local counsel in most locations that can and have worked with our office to form and manage entities. The specific fees, providers, taxes due, and political, legal, and finance source advantages depend on where you want to do business and what your investor’s reporting and income receipt needs are.
Special circumstances may affect your choice. Singapore, for instance, has high entity capitalization requirements, but good access to capital and well organized formation and banking services for SE Asia and other branch/parent structures. Don’t plan to drive if you want to live there, though. Taxes are fierce. Hong Kong has exemption for local entities from the goods and services tax on domestic Chinese entities, so two entities for manufacturing subsidiaries in China, one for operations and one for shipments and tax incidence in Hong Kong, may work.
My law practice has included tax and entity formation, acquisition, and divestiture, as well as US citizen international banking and tax reporting and tax treaty compliance projects for customers in the US, Germany, Japan, Indonesia, Pakistan, and other jurisdictions. For a free or low cost consultation on international business entity formation and operation, call or email me at 1-800-630-4780 or firstname.lastname@example.org