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Country of Incorporation | The 10 Best Countries for Your Business
In the SelfKey Incorporations Marketplace you can find a plethora of information on many excellent jurisdictions. In this blog post, I’ve highlighted some of the finest countries and explain what makes them special.
The country in which you start your business plays a crucial role in your future success. Every country is different, posing advantages and challenges that you might not have thought off.
That being said, some countries are particularly hospitable to business owners. This article provides a list of the best countries in which to launch your incorporation. In order to evaluate the suitability of a jurisdiction, we will be paying close attention to each country’s current situation, applicable taxes, important legal requirements, and the incorporation process.
1. Hong Kong – The Winner
Starting off our list we have the flourishing, autonomous territory in Southeastern China: Hong Kong.
Not only is it the gateway to the largest economy in the world, but it also boasts a very stable financial and political situation. In fact, Hong Kong ranks among the top 40 countries in terms of GDP, and is the freest economy in the world according to the Index of Economic Freedom. No wonder then, that Hong Kong is very business-friendly and has a great international reputation.
Taxation is simple, corporation tax is low, at 16.5%, there is no capital gains tax and no customs duties. The personal income tax rate is set at 17% and there is no VAT.
Additionally, the incorporation process is beautifully simple, as it can be done remotely in as little as two days. Hong Kong is also home to some of the strongest banks in the world, and enables entrepreneurs to set up a bank account with ease.
Overall, Hong Kong is a superb jurisdiction to incorporate in, and a deserved first place on our list.
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2. Estonia – Progressive and Welcoming
Next on our list we have the Eastern European country Estonia. Not only does Estonia have perhaps the most technologically advanced governance, but it also boasts some of the most progressive legislation on voting, healthcare, banking and taxation anywhere in the world.
You may have seen Estonia in the news, because they digitized almost every branch of government, and launched wildly popular services like e-residency. As a result, Estonia has become a hub for technology and dozens of startups have thrived there. Blockchain companies have done particularly well, as Estonia has the easiest and most affordable licensing process for crypto exchanges and wallet service providers.
This country has a straightforward and reasonable tax system. There is no taxation on retained profits and 20% taxation on distributed profits. Corporate compliance is made very simple as all mandatory filings can be done electronically.
As for the incorporation process: Estonia leads the world, allowing you to remotely register a company in under an hour.
Finally, Estonia is part of the European Union and gives you access to the shared market comprising 500 million people. The European market is a steady and profitable one, and starting your business in Estonia is a gateway to the European Union.
3. Switzerland – Established and Trusted
With a long tradition of financial, political, and economic stability, Switzerland is also a great country to start your business in. As Switzerland is small and landlocked, its economic policy is very hospitable towards foreign free trade, with low import duties and just a few import quotas.
As a result, this country is known worldwide as a center for trade and finance, which means you’ll have access to top shelf corporate banking facilities and services.
From a taxation perspective, Switzerland is also very attractive. It has one of the lowest value-added tax rates (8%) and the country offers a number of tax incentives, grants and rebates for companies involved in many different industries. Corporation tax is only 7.8%, which is the same as capital gains tax – both of which are very low compared to other countries.
For this reason, many large international firms and SMEs choose to establish their headquarters here. Incorporation is relatively painless and can take as little as five days. Importantly, you’ll have access to free trade and movement in the EU.
4. British Virgin Islands (BVI) – Great tax regime
The British Virgin Islands are one of the world’s largest offshore financial centers and one of the best countries in which to incorporate.
Importantly, BVI has a strong offshore regulatory environment, which combines oversight with economic freedom. This approach allows you to do business with ease, while still enjoying reputable banks and a comprehensive compliance framework.
Of course, English speakers are drawn to BVI because English is the primary language used on the islands. Fortunately, you do not need to appoint a local director or local secretary. Instead the application process as well as the control over the legal entity can be done remotely. One thing to keep in mind however, is that all international business companies are required to maintain a Register of Directors.
The BVI also scores points with very friendly taxation, only levying a stamp duty on the transfer of land. There is no capital gains tax, corporation tax, personal income tax, or offshore tax.
With all this in mind the British Virgin Islands are a fantastic country of incorporation and definitely checking out.
5. Cyprus – Very hospitable to foreign businesses
Cyprus is number five on our list and an excellent choice for your business. Located in the Mediterranean, the former British Colony is a member of the European Union and boasts annual GDP growth of just under 4%. It has become a gateway to the European market by many non-EU companies.
Besides the strong economy and beautiful location, Cyprus is attractive because of its fair and transparent tax regime. The offshore and corporation tax rates of 12.5% are very fair and there is no capital Gains tax. Dividends earned by companies in Cyprus are exempt from all taxes – with the exception of foreign-source dividends which are still tax deductible for the paying company).
The reason Cyprus is a little lower on our list is that the Incorporation process takes a little longer. You can expect to wait 2 weeks to complete the process, which is significantly longer than most other countries on this list.
Nevertheless, Cyprus is an excellent location to incorporate in, especially if you want access to the European Market, while paying very reasonable taxes.
6. Panama – Excellent access to the Americas
The Republic of Panama is located in Central America and is home to the renowned Panama Canal. This has allowed the country to become an international trade hub, providing both a stable economy and political situation.
Panama also has great infrastructure, and is one of the largest free trade and international distribution centers in the world.
For new business owners Panama offers a fair and transparent tax regime. Corporations that conduct their business outside of Panama are exempt from all local taxes and there are no foreign exchange controls.
Companies that do business domestically, can expect to pay a 25% corporation tax but no capital gains tax.
If privacy and confidentiality are a concern, you’ll be happy to hear that shareholders and beneficial owners’ details are not publicly disclosed. Confidentiality of business and banking transactions are protected by law.
Overall, this makes Panama a great country of incorporation.
7. Malta – Join the European Single Market
Malta, the southern European Island, is another popular choice for international and holding companies. Comprising just 400,000 citizens, Malta is particularly amenable to entrepreneurs from abroad that wish to set up a business there.
With access to the European Single Market, attractive taxation and progressive legislation, Malta is a deserved member of our list. You might be taken aback by the ostensible 35% corporation tax, but rest assured that there is a system of tax credits and refunds which bring the effective tax rate down to 10%.
Malta has also signed a large list of Double Taxation Agreements, and startups in Malta have access to a skilled English-speaking workforce.
The Incorporation process is straightforward, with an expected processing time of 5-10 business days.
8. Cayman Islands – Taxes of the Caribbean
The Cayman Islands is number eight on our list and represent another excellent country of incorporation.
Located in the Caribbean, the autonomous British Territory has built a stellar reputation in the business world, being the world’s leading offshore financial services hub. In fact, the small country offers a stable economic and political environment in which entrepreneurs can thrive.
One of the key reasons for the success of the Cayman Islands, is the attractive tax regime. Here business owners do not have to pay corporation tax, capital Gains tax, or offshore tax. Additionally, an Exempted company can even apply to be free from any law enacted in the Cayman Islands that levies tax. Not bad.
The reason the Caribbean Island ranks towards the bottom of our list, is because of the relatively large import duty tariffs which range between 22% and 27%. Depending on your industry, this could prove to be a real pain.
Nevertheless the Cayman Islands is one of the best places to start your business.
9. New Zealand – The World’s Easiest Country to do Business
Last but certainly not least, we the easiest country to do business in the world (according to the World Bank). The government welcomes business and has taken many steps to make immigration easier for investors and business people. Along with a strong economy that shows steady growth and a relatively laissez-faire regulatory environment, it’s no wonder it’s the top of the World Bank’s list.
As far as taxation goes, the current corporation tax rate is 28%, but there is no Capital Gains tax. There are also a number of tax incentives, plus New Zealand has tax treaties with a large number of countries. Incorporation can take just a few hours online. With a modern, prosperous, and developed market economy, New Zealand might be the right place to start your business.
10. Singapore – Get Access the Asian Market
As the trading hub of Southeast Asia, Singapore is home to the busiest port in the world. With one of the fastest growing regional economies, it has major potential for entrepreneurs who are looking to start a business in a hospital environment. Singapore is a country that encourages entrepreneurship, and the government supports a free market.
One of the best parts about starting a business in Singapore is the transparent tax scheme. Although Singapore has a corporation tax of 17%, there is no Capital Gains tax and startups are eligible for several different tax breaks and incentives. The Personal Income tax rate is reasonable at 22% and VAT is only 7%.
Launching an incorporation in Singapore can be done through the SelfKey Marketplace in less than an hour and you can expect to hear back in 1-3 business days. Singapore’s court system is known for being fast, providing a great bureaucratic environment in which to work.
On the down side, all Singaporean-incorporated companies are required to have at least 1 director who is a citizen or permanent resident. This is the reason Singapore is last on our list, despite offering a great country of incorporation otherwise.
Country of Incorporation: Our Top 10
I hope this list has been helpful. It represents a fraction of the information available to you in the Incorporations Marketplace. If you’re looking to launch a legal entity or are still researching the benefits of starting a business overseas, the SelfKey blog has what you need.