John Bickett is a serial internet entrepreneur based in Europe; with success of multiple businesses to his credit. His lines of businesses range from local cab reservations to restaurant reservations and event tickets resell to domestic holidays though the internet and mobile applications. All these businesses were doing fairly well and it was time for John to take his entrepreneur skills global.
He recently got an App built locally, that aids in managing the expenditure for living together roommates. The app lets a group of friends who share a common roof; keep track of the expenditure and split the costs among them. Considering that the youth would be biggest set of users and the biggest target for B2C advertisers; the mode of revenue was planned to be though in app display ads.
Owning to the possibility of universal consumption, that is; an app that can be used by users across the globe he was sure to garner interest from the global investor community. Basis initial discussions with a few potential investors he came across the option going offshore.
He learnt that going offshore for the business has benefits beyond saving up on taxes. Going offshore had several benefits like quick set up, low admiration costs, minimal annual paperwork; Offshore jurisdictions have minimal or close to nil taxation on worldwide income. Several offshore jurisdictions also enable listing in their stock exchanges; which can be cumbersome and may require heavy investments in mainland countries. They also have favorable Intellectual Property Rights and Transfer laws
Critical among these advantages, from an Investor perspective was the cost saving on tax that the potential investor would make if the investment is made in an offshore company. Offshore companies have simplified legal framework, optimized tax structures and enable quick transactions while keeping exposure of information limited.
Going offshore would be a win-win situation for John and his potential investors. They get taxed lesser than general. Offshore jurisdictions charge taxes in the range of nil to 17 % while mainland countries charge corporate tax in the range of 30%-45%. Add to this the benefits of acquiring technical and business inputs from a global expert pool.
After much deliberation they set up the company in Hong Kong to attract investors from China and APAC. Today John’s app “Roomie” has investments to the tune of USD 500 million. Having understood the value and advantage of going offshore; John is today in the process of moving his other business offshore and expanding their reach to Europe and beyond.
Like John there are many innovative entrepreneurs, who are not conceptually sound of finances or international laws but want to take their businesses global and get global funding. All that is required is a little understanding and a credible international law consultant to help take your business Global.