For various reasons, entrepreneurs operating in their own country often decide to start a business abroad. This is a fairly common phenomenon and a serious step for any businessman, requiring a thoughtful approach. We have analyzed the peculiarities and advantages of conducting entrepreneurial activities in different countries. We want to discuss the positive aspects and possible challenges of incorporating business abroad: where to start and in which jurisdictions the company Dynasty Business Adviser will help you open a business.
Which Country to Choose for Conducting Business
To choose the correct country for opening a new business or relocating an existing one, it is vital to consider the following key factors:
- stability of the political environment, in particular frequent changes in laws regulating business activities (additions to the current legislation are the norm);
- peculiarities of the tax system – types of taxes, rates, availability in the country of free economic zones with preferential taxation regime;
- regulation of entrepreneurial activity of foreign investors – pay attention to the requirements for the size of authorized capital, obtaining a license, what share of the business a foreigner can own;
- the level of corruption and the government’s policy on corporate raids;
- the level of development of necessary infrastructure – rental costs, logistics, availability of sales markets;
- socio-cultural peculiarities – differences in mentality and traditions may hinder successful business in another country. In order to establish business ties and build trusting relationships with business partners, it is important to adhere to the business and everyday etiquette familiar to the chosen country.
Gather and analyze all relevant information about the countries of interest, carefully weighing the pros and cons. It is advisable to seek assistance from consulting firms specializing in abroad business setups, such as Dynasty Business Adviser.
Features of Doing Business Abroad
In different regions and countries, unique business features sometimes differ significantly from what you are accustomed to while engaging in entrepreneurial activities in your country of permanent residence. Among such features, we can name:
- business registration procedure – how complicated or simple is the procedure for opening a new company or branch, whether it is possible to register a company online, the cost and duration of turnkey business registration;
- the possibility of lending to foreign businesses, encouragement of start-ups by the government, terms of loans and social benefits;
- tax optimization – by choosing the right jurisdiction, an entrepreneur can reduce the overall tax burden on the business and save significant amounts on corporate tax and VAT;
- audit and accounting reporting – requirements to the formation and frequency of filing reporting documents;
- organizational forms of companies available to foreigners;
- residence permit – the vast majority of countries will require a visa to open a business. For example, in the UAE, foreign investors can apply for residency for up to 10 years with the possibility of extending the residency or “golden” visa an unlimited number of times;
- the level of confidentiality of personal data, openness of registers for public access;
- reliability of the banking system, including the presence or absence of control over currency transactions;
- cost of labor, social contributions;
- the influence of local traditions on communication with partners and others.
We will consider several of the most popular jurisdictions with the lowest tax burdens, which entrepreneurs from different countries choose today.
United Arab Emirates
The UAE is one of the most attractive countries for conducting business abroad. A foreign investor can register the following:
- A local company on the mainland, outside free economic zones (free zones).
- An onshore company in a free zone;
- An offshore company to conduct activities outside the UAE.
The features of doing business in the Emirates include:
- Availability of various legal forms for registering legal entities.
- 100% foreign ownership for most types of activities.
- Ease of starting a business – with the support of specialists from Dynasty Business Adviser, your presence in the Emirates will only be required when opening a bank account.
- Absence of most taxes — by choosing the United Arab Emirates to do business in another country, you will only pay:
- Corporate income tax — 9% on amounts over 375,000 dirhams (just over $102,000).
- VAT — 5% on turnover of goods over $102,000.
- Excise tax on goods harmful to health.
- Mandatory licensing for any type of activity and its annual renewal.
- Government support for foreign business.
When conducting entrepreneurial activities in the UAE, adhering to the principles and customs of this Muslim country, which lives according to Sharia law, is essential. Food is often served at business meetings before negotiations, and refusing it can be considered disrespectful or offensive. For the same reason, it is not advisable to step back if your Arab counterpart stands too close – this is considered normal here and a sign of trust.
And one more important detail is the necessity of knowing the Arabic language. Although locals and expatriates speak English fluently, Arabic-speaking foreigners are remarkably respected in the UAE and other Muslim countries.
Hong Kong
If you register a business abroad in a particular administrative region of China — Hong Kong, you will pay a single tax on corporate profits. Its rate is 16.5%, and for sole proprietorships and partnerships, it is 15%. Additionally, here you’ll find:
- Preferential conditions are provided for startups — 7.5 and 8.25% tax on the first 2 million Hong Kong dollars of profit.
- There are no taxes for companies conducting business outside the region.
- The infrastructure and banking sectors are well-developed.
- A wide variety of legal forms of companies are available.
- There is no control over the activities of foreign companies and no restrictions on capital movement and currency circulation.
Every foreign company must have a secretary who is a resident of Hong Kong and manages the business. Additionally, one should consider the high standard of living and the uncertainty of prospects after 2047, when Hong Kong will lose its autonomy status.
Singapore
Among the features of conducting business abroad, in Singapore, we can mention:
- The possibility of remote company registration and 100% foreign ownership.
- A simple and fast business incorporation procedure.
- A minimum paid-up capital of 1 Singapore dollar.
- No taxes on income from sources outside the country.
- A simple tax system with a corporate income tax rate of 17%.
- Tax incentives are provided for companies creating jobs for highly skilled professionals and startups on their first $100,000 and $200,000 profit.
Advantages of Conducting Business Abroad
Deciding to open a business abroad, every entrepreneur finds essential advantages in the chosen jurisdiction:
- The possibility of tax optimization due to more favorable tax legislation.
- Prospects for scaling the business and entering new markets.
- Reducing the risks of financial losses in a more stable economic and political environment.
- Access to a well-developed banking system simplifies financial transactions with foreign counterparts.
- Access to cheaper credit resources and better investment opportunities is essential, especially in countries of the European Union, the United Kingdom, and the United States.
- Increasing the prestige of the business by incorporating it in a jurisdiction with a good reputation.
- The prospect of obtaining a residence permit and citizenship.
You will find the best place to open your business in another country by comparing the pros and cons of different jurisdictions. One of the most attractive countries for foreign investors today is the UAE. The main advantages of this country include:
- Convenient location relative to transportation routes connecting Europe, Asia, and Africa.
- The most favorable tax system in the world.
- There are no customs duties for international trade, and there is only a 5% import duty on goods imported for sale in the Emirates.
- There are 45 free trade zones with preferential tax regimes.
- The possibility of obtaining a residency visa for the founder, members of his family, and employees, as well as tax residency status for the company, helps to avoid double taxation.
- Excellent banking, transportation, and other infrastructure.
Specialists from the Dynasty Business Adviser company will help you open a business abroad in the UAE within the optimal timeframe.
Where to Start a Business Abroad
To open a business outside your country of permanent residence, follow the following algorithm of action:
- Determine the type of activity for your future company – You should have a good understanding of all its intricacies.
- Conduct market analysis for the chosen direction in different countries. Determine the level of competition and the prospects for developing your business, considering local traditions and socio-cultural characteristics.
- Choose a country to incorporate your business based on the planned investment amount and the level of taxation.
- Seek assistance from a consulting company, that supports opening businesses in this region. Obtain detailed consultation on local legislation.
- Develop a business plan and a strategy for your business’s future development, and begin registering the legal entity.
To save time and avoid spending money on frequent relocations, correcting document errors, and other organizational issues, it’s better to entrust the opening of your business abroad to specialists. The Dynasty Business Adviser company will help you open a turnkey business in the Middle East with minimal involvement. You can also request business management services, such as outsourcing accounting support if desired.
Possible Pitfalls
The main difficulties and obstacles you may encounter when opening a business in another country are:
- Language barrier – Even with a good knowledge of English, it’s better to learn the language of the local population, which will help resolve conflicts.
- Insufficient knowledge of laws, can lead to their violation and severe fines.
- Ignorance or disregard of local traditions – To maintain relations with business partners, it’s better to know their customs and accepted etiquette and adhere to them in advance.
Top Popular Business Ideas Abroad
The most popular business ideas for entrepreneurial activities abroad include:
- Domestic and international trade.
- Business in the IT industry.
- The provision of services to the population is particularly in demand in countries with a high standard of living (Europe, UAE, and others). This may include car rental, car service, fitness center, beauty salon, medical services, healthcare, childcare, or elderly care services.
- Restaurant businesses, cafes, and fast-food outlets.
- Freight and passenger transportation, logistics business.
- General construction and finishing works.
- Hotel and tourism business.
- Consulting services and other types of activities.
Countries Where We Help Register and Run Businesses
Our company is a licensed UAE registrar of onshore and offshore firms. We provide consultancy support and tangible assistance in opening and running businesses in the Emirates Bahrain Qatar.
Our article is not a legal consultation but is informative. If you need professional advice from lawyers, economists, and business specialists, please contact the managers of Dynasty Business Adviser!
