Choosing the Best Offshore Company Structure for Australians (2024).

The Cook Islands: A perfect offshore company location?

What's Inside

I do a lot of work with Australians who wish to remain in Australia, find the best tax structures to suit them in this country and find completely legal ways to reduce their tax bill.

That’s understandable and I can certainly do that. But it’s not for everyone.

Sometimes, the unbearable tax burden within Australia’s borders cause many to sit up and ask:

Is this the best I can get?

And for those who want to look elsewhere … I fully recommend picking up your bat and ball and simply leaving the country. Going elsewhere.

And no better time to plan than now. While travel is in lockdown.

With my combination of Australian and international tax law experience, I help countless businesses and high net worth individuals find ways to take their company offshore for the best structure that helps them 100% legally save on their tax bill. 

Is it legal? Absolutely!

Can everybody do it? No.

Is it for you? Possibly.   

Taking your money offshore has gained a bad rap in the past few years especially with the leak of the Panama Papers where my name was mentioned. 

In an article by the ABC, I was interviewed about my connection with those papers. I was found to be completely free of any wrongdoing, and simply finding 100% legal means to help everyday Australians slash their tax bill. In fact the ABC specifically told me they’d been investigating me undercover for a number of months beforehand and found nothing on me.

Good to hear someone else confirm I do things by the book.

And sometimes, the best way is … simply leave Australia’s shores.

Let’s look more at this.

Why Australians Are Setting Up Offshore Tax Structures

International business takes you outside Australia’s borders

Australia has less than 2% of the world’s GDP and only 0.33% of the world’s population. 

That means that if you operate a business solely within the borders of this country, you’re missing out on 98% of the capital out there and 99% of the customers. 

It’s time to think beyond the borders of Australia. 

And it’s not just tax reasons. In fact tax is a small part of why you’d start going offshore. While I advocate moving your company offshore for tax reasons if you can do it legally, I also like the idea of expanding the reach of your business to a wider market.

The best offshore business structures aren’t found in Australia but in countries like Seychelles, Malta, Hong Kong, Singapore, and Nevis. It’s worth the time and energy to set up a company there if you can begin to access 100% of the market.

I work with plenty of businesses who want to grab onto that opportunity. They find once they start setting up an American LLC or Hong Kong pension fund, their own mentality changes as well. They start to think globally and their business reflects their mental shift. 

Another reason Australians think about the best offshore company structure for them is to protect their assets. 

If I were to ask you what the top three jurisdictions are for lawsuits, you’d probably answer with an all-American line up. 

Your first two guesses would be right, but the third-highest lawsuit per capita is New South Wales with Victoria trailing not too far behind.

It’s shocking but we live in a very litigious society. If you run a business, you’re best thinking about when the lawsuit will hit, not if it hits. 

So how can you protect your own assets? 

This is the advantage that an offshore company structure suits best. By using a man of straw that bears all the risk and an offshore company, you can distance yourself from your assets while still controlling them and the income they generate. 

I know a lot of my clients ask me about taxes. I think that an offshore company can work for taxes, but I see it as a side benefit. If you’re willing to become a non-resident of Australia (as in, live somewhere else for the majority of the year), you could effectively reduce your tax bill to zero (not that this is for everyone).

Other countries like Panama are very friendly toward foreigners with high tax rates for locals by almost zero tax for any foreign company. Not everyone likes these types of countries. So it takes some careful planning according to what your needs are and your goals for the shift. 

How to Choose the Best Offshore Company Structure

Singapore is the white tier country of choice for international company structures.

The best offshore company for you is completely different from the last client I saw. It will be different again from the client that comes in next week. It all depends on what you like, what you need, and the structure of your company. 

For one, I’d like to introduce Panama to the conversation. As I said before, it’s extremely friendly to foreigners. I’ve found that the rules can be very flexible for Western money. It’s also very easy to set up a Panamanian LLC or to establish a Panamanian Permanent Residency, due in part to the work of their president Ricardo Martinelli and his Visa reforms. 

But it has its downsides. 

Although the work we do there is completely legal, the country name is associated with corruption and financial malpractice. Transferring a lot of dollars through the country could get you flagged and investigated. More on that in a minute.

Another popular location for my high net worth clients is Hong Kong. It’s very close to Australia, so it’s easy to fly in and out if you need to sign paperwork or set up some offices. 

The whole country is a former British colony, meaning that it’s charters and systems are very similar to Australian practices. The tax system in Hong Kong counts only where the profits are made, not the money. And that can make a huge difference. It also offers incredible access to the growing Chinese and Indian markets from a very convenient location.

While there are a number of locations that I could recommend, it’s helpful to think of them on a scale. And for that, we use a tiered system that offers a tradeoff on privacy and transparency, each with its own pros and cons.

The Tier System for Offshore Structures 

Let’s think of these tiers in three colours: white, gray, and black. 

On one end of the scale, you have the WHITE tier countries like New Zealand, Hong Kong. 

Hong Kong has international renown. It has precedence. It has well-respected laws and jurisdictions. In short, people like trading with Hong Kong countries. 

Another example is Malta, which has the distinction of being located in Europe. Taking advantage of the Malta tax system, you could your tax as low as 5%, if you know what you’re doing. You could easily get it under15% without much effort. 

On the opposite end of the spectrum, you have BLACK tier countries. 

This is where you find maximum privacy, maximum protection against the government, but it also attracts a lot of heavy scrutiny. Countries like Panama, Samoa, Cook Islands, Seychelles all operate under this black tier flag. In my opinion, they’re not great for a business to operate. 

The downside of that is the appearance of operating from within those countries, not really an appealing thing for many other companies. If you’re not looking at doing a lot of trading, I would certainly recommend black tier countries for asset protection for their privacy laws and low tax systems. But it doesn’t do a lot to offer credibility on a global scale. 

Somewhere in the middle, you have GREY tier countries. 

You have some of the benefits of privacy but you also have some semblance of operating credibility. Places like the Isle of Man, Gibraltar, Dubai to some extent, or Luxembourg. 

These grey tier counties are where the big institutions like to play, lending an air of confidence while still retaining some distance.  

For many of my clients, these grey tier countries don’t have the negative press like Seychelles and therefore offer the best opportunities. They can be very low tax markets, or they only charge tax on local income and not on foreign income. 

Selecting Your Best Offshore Company Structure 

I’m hesitant to say which selection would suit you. There are so many variables at play that it requires a conversation to make the best decision. 

If you are a business that is highly mobile like an options trading business or online educational business, you can set up shop in Singapore or Malta for their tax benefits and friendly trading atmosphere. But if you want to park investments for protection, I’d recommend looking at something in the West Indies, the Caribbeans (eg. St Lucia, St Kitts) or Samoa. 

So What’s My Next Step?

To know what’s the best offshore company structure for you, have a chat with us. 

We have tax specialists who can offer you the advice no one else is giving you. 

Too often, the accountants that a business would hire are more fearful of doing something wrong by the ATO then in offering up a solution to save taxes. If you want to get the same results as last year, by all means, keep that accountant on the books. 

But to discuss out-of-the-box ideas for the next step for your business, we can help. 

When you fill in the contact form, we can set up a no-risk, 30-minute free chat to discuss your current situation. 

It’s not for everyone. But for many of my clients, heading offshore was the best decision they ever made. And it could be your best decision as well. 

Fill in this contact form and talk to us today!