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International Business Companies (further referred to as IBC), also known as offshore companies, are often subjected in their domicile jurisdiction to 0% taxation. Major part of the offshore companies (incorporated in tax havens, such as Seychelles, Nevis, BVI, Belize, Marshall Islands, Dominica, etc.) has no tax liability whatsoever.

The main principles of any IBC tax systems can be defined as follows: there is no tax on capital gains, corporate income, dividends, interests or royalties.

Another fundamental aspect of IBCs lies in financial reporting requirements, stating that IBCs:

Do not require to file annual returns to the local tax authorities;
Do not submit financial statements;
Do not perform audit for the annual financial statements.
However, from the business perspective, finance and accounting are the most important aspects of your company. Confidus Solutions team is composed of finance specialists and bookkeepers who are well- skilled in international accounting standards and auditing. From accounts payable to accounts receivable, to finance reporting, we are eager to help you to improve your business corporate structure and tax planning.

Preparing financial statements for an offshore company
In case the government would not demand you to keep draft and submit bookkeeping and annual reports, would you still do that voluntarily and what would be the quality of your company’s bookkeeping? Nowadays, numerous tax haven jurisdictions have no requirements regarding the submission of annual or monthly tax returns and reports: offshore companies have an autonomous freedom of choice to keep the documents as they wish. However, more and more offshore jurisdictions have started modernizing and updating their legislation, gradually introducing a compulsory requirement to keep financial records and documents, as the beneficial owner of such company would be the one, who benefits the most out of that. This aspect can play a crucial role, especially when an offshore company is being owned and managed by several individuals, thus providing more efficient system of monitoring assets and supervising decisions that are made.

For example, on Seychelles, companies are required to keep drafts, without providing bookkeeping records for state authorities that subsequently allows monitoring the economic status of the company, in order to provide owners with actual information at all times. However, there is no requirement to submit any financial documents publicly, as well as there are no requirements regarding statutory audit. In theory, local tax authority may request the company to provide and/or improve its records. Nevertheless, such situation may occur under circumstances provided by legal acts only and it usually can be foreseen and avoided.

As we have just mentioned, tax havens (BVI, Panama, Seychelles, Nevis, Marshall Islands, Dominica, etc.,) do not require filing annual financial statements within the local authorities. However, nowadays many offshore companies choose to prepare annual financial statements for IBCs and tax haven companies voluntarily. The reasons for such actions are as follows.

Legal provisions of many offshores require keeping proper records of bookkeeping by the company. Profit & loss statements, general ledger and balance sheet of the company must always be available upon request by the registered agent. All bookkeeping documents confirming transactions must as well be kept by the company: invoices, contracts, transportation documents, bank statements, etc. Such provisions exist in (BVI, Seychelles, Nevis, Belize and many other offshore jurisdictions. Please note that financial records of International Business Companies are allowed to be stored in any location of the world, not necessarily within the registered office.

Your bank may ask for the financial statement of your offshore company. As banks toughen their requirements towards tax havens, one of the ways to keep your corporate banks account for such company is to present accounting statements upon request. Frequently, banks require the most basic accounting reports: profit & loss statement and balance sheet.

Your own control over financial operations are the most obvious reason to maintain account records for any business.

Given that within the European Union there are no withholding taxes on IP royalties between member states, we can suggest a number of countries where royalties are particularly advantageous.

CYPRUS
The intellectual property royalties tax regime in Cyprus has changed as a result of the recommendations of the Organization for Economic Co-operation and Development (OECD) Action Report 5 and the Ecofin Council conclusions published on 8 December 2015. Legislation has been changed to limit the companies that can benefit from research and development (R&D) exemptions, but the tax rate in Cyprus is still one of the most favorable in the EU for foreign companies using Cyprus intellectual property want to license -resident companies (intermediaries), where this right is then sub-licensed to the end user. Overall, the effective tax on IP royalty income should be less than 2.5%.

IRELAND
In 2015 Ireland introduced an effective corporation tax rate of 6.25% on intellectual property income based on an allowance for research and development costs borne by the company. By linking the two components in this way, Irish law encourages companies to conduct R&D directly within the EU - leading to the creation of intellectual property - while discouraging them from acquiring licenses without directly committing to R&D.

BELGIUM
Belgium has introduced a tax system that favors those with income from acquired copyrights. This tax regime can have many different applications and can be used to protect artworks as well as a useful tax break for IT developers. Income from IP rights royalties is taxed at 15%. This income is not taken into account when calculating social security contributions. In addition, these taxes are reduced by 50% for imports due to the application of standard import costs. The first €15,000 that a copyright owner earns in a year is therefore taxed at 7.5%, and the next €15,000 at 11.25%. This tax system applies to people with a total annual income of up to 56,450 euros.

LUXEMBOURG
In general, corporate tax in Luxembourg is 29.22%, but for IP licensing income it can be as low as 5.8%. This is due to an 80% corporate income tax exemption. Interestingly, this exemption also applies to companies that have registered a patent for use in connection with their own business, which then calculate a notional net income as if they had received the licensing income.

ITALY
Italy is a larger market compared to the other countries discussed and can be a very attractive place for a company to invest in R&D since 2015 companies have been able to deduct intellectual property income from their taxable income base. The tax deduction was set at 30% in 2015, 40% in 2016 and 50% from 2017. Businesses will therefore enjoy a significant tax rebate by reducing their taxable income.

THE NETHERLANDS
Since 2010, IP income has been taxed at only 5% in the Netherlands. Except for patents, there is no income limit. Patent holders can actually have access to this tax regime if their share of the expected revenue is between 30% and 70%, taking into account the total combined revenue from patents and other sources. These rates also apply to foreign companies owning intangible assets or companies that have received research and development accreditation from the Dutch Ministry of Economic Affairs if they are owners of software IP or trade secrets. The only other caveat to this favorable tax regime is that it doesn't apply to marketing and branding-related assets.

Multinational companies and governments around the world are increasingly looking to Africa as a new business destination. Africa's economy has grown at a rate of around 5.3% per year over the last decade and six of the world's ten fastest growing economies are located here. These countries have a fast-growing middle class that contributes to rapid urbanization that is increasing faster than their cities' infrastructure can keep up. It is a common misconception that many economies in Africa are heavily dependent on energy production. In reality, the oil and gas sector accounted for only 11% of Nigeria's GDP in 2014, while the construction sector accounted for 20%.

When considering doing business in Africa, it is not a matter of choosing just one country or all 54; A regional approach makes more sense. Sub-Saharan Africa, for example, refers to sub-Saharan countries such as Angola, Kenya, South Africa and Nigeria. Many companies already doing business in Africa are separating their businesses in North Africa and Sub-Saharan Africa due to the stark economic, linguistic and cultural differences between the two regions. Here are our top 5 African countries for doing business:

Mauritius
Mauritius is known for offering an extremely favorable business environment for investment and business growth. The process of incorporating a company and starting new business activities in Mauritius is believed to be straightforward and relatively easy. Mauritius' economy is mainly based on textiles, tourism, sugar and financial services, although recently other sectors such as renewable energy and information technology are expanding rapidly. The World Bank ranked Mauritius 49th in its Doing Business 2017 ranking, largely due to its pro-business approach to dealing with building permits, enforcing contracts and protecting minority investors. Another ranking of African countries places Mauritius first based on factors such as law and security, economy, human development and human rights.

Rwanda
Despite nearly a decade of Rwanda's civil war, the country's leaders and citizens alike have worked to achieve a healthy business climate and a strong overall economy. According to the World Bank, Rwanda is the second easiest place to do business in Africa and ranks 56th in the Doing Business ranking. This is because the procedures for registering a property, obtaining credit and trading across borders have been greatly simplified. Tourism is currently the fastest growing sector in Rwanda. According to our research, businesses can be incorporated and operating in as little as three days.

Botswana
Since gaining independence, Botswana has had one of the fastest per capita economic growth rates in the world. As the government works to diversify the country's profitable industries, the mining of diamonds and other precious metals is currently the main contributor to the country's economy. Recently, Botswana has managed to reduce the time it takes for various processes including import and export and business formation procedures. In addition, technological upgrades have reduced the average court length for commercial disputes to 625 days (from 987 days in 2008). Thanks to these improvements, Botswana ranks 71st in the World Bank's Doing Business 2017 ranking.

South Africa
South Africa's key industries are automobile manufacturing, tourism, mining and information and communication technologies. South Africa has managed to simplify its import and export procedures, resulting in less time and fewer documents required. In addition, the South African authorities have simplified tax legislation, reducing the number of hours required to prepare tax reports. The World Bank ranked South Africa 74th for ease of doing business in 2017.

Kenya
Another country to keep an eye on is Kenya, which is currently making huge investments in sectors such as telecom, transport and energy. With a tech-savvy workforce and high-speed internet, Kenya stands out as one of the top countries in Africa for tech startups, while its diversified economy, strong ownership rights, excellent tourism sector and improving infrastructure make it a great location for general start a new company. If you have further questions about company formation or banking in Africa. Please contact us now.

Legal translation is all about providing legal translation services. This includes the translation of contracts, agreements, articles of incorporation (in the case of a company incorporation) and various business documents and forms.

Legal translation differs from other forms of translation as it relies on extreme precision in conveying information and terminological correspondence, as an incorrect translation can lead to significant legal discrepancies, including violations of the law and court cases. This is the main reason why legal translation services are offered by dedicated agencies to support businesses like Confidus Solutions. Translators who have no prior knowledge of legal linguistics risk an incorrect translation of a contract, which may result in legal consequences for the company.

Business translations
Business translation can be seen as a sub-type of legal translation that deals with contracts, agreements and other legally binding documents between two parties. Business translation deals with both law and business, as most contracts use terms from both fields. Since corporate documents often include not only incorporation documents (articles of incorporation, shareholder agreement, etc.) but also documents relating to day-to-day business operations, quality business translations are a must at all times if you want to avoid unnecessary risks and litigation.

Potential translation challenges may include: Names of legal entities arising from the fact that many jurisdictions recognize different legal entities that may more or less correspond to each other. A single legal form in one country may be represented by several similar legal forms in another. When incorporating in a foreign jurisdiction, it is crucial to correctly state such differences in the companies' registration documents, as this defines the scope and nature of the company's structure and activities.