Zero tax jurisdictions with infrastructures

QX Trust Company will help you abide by the new global tax requirements

Entrepreneurs are always looking at overseas locations to run their business with zero or low tax so as to survive in the highly competitive business scenario. However, today the world has become a global village. With the implementation of AEOI (Automatic Exchange of Information) in 2018, a zero or low tax jurisdiction which is unable to issue a tax certificate to the overseas company and the expatriates will be a bad news. Many of such tax heavens have a dearth of the infrastructure which enables it to assist the overseas business houses to create a commercial substance.

Let’s first understand what CRS is. This will help us understand, how the Labuan free trade zone and financial centre in Malaysia stands apart from other such jurisdictions.

Collecting the taxes due to it diligently and to thwart any attempts at tax evasion is a common interest of all Governments and authorities in the world.

However, many business persons and corporates have been finding loopholes by taking shelter in the (ill) famous tax heavens like Cayman Islands or Monaco. Hence demands for more standardised levels of tax reporting compliance at the international level have been increasing over the last decade.

Various countries have existing treatise for exchanging financial details of certain individuals or corporates on ‘exchange on request’ basis. However, these measures were not sufficiently effective deterrents against cross-border tax evasion.

At the request of G20 countries, the Organisation for Economic Development (OECD) has in 2014 established what is known as CRS (Common Reporting Standard).

The CRS is a standard for the automatic exchange of information (AEOI) pertaining to financial account. It compels a jurisdiction’s financial institutions such as banks, trust companies, insurance companies, and corporate services) to report to their tax authority specific information on yearly basis pertaining to the financial accounts in the names of non-resident persons and institutions like companies, partnership firms, trusts and foundations located in countries which are committed to CRS.

It works on a reciprocal basis.

For example, a non-resident person who is paying taxes in a country other than the one in which he has a bank account, that bank will give his personal account details to the local tax authority, which may then be shared on yearly basis with the tax authority where he is liable to pay taxes as a resident.

Following information will be collected and shared by 200 jurisdictions that are currently committed to the standard.

  • Identity data (name, address, Taxpayer Identification Number and date and place of birth)
  • Jurisdiction of residence of individual
  • Account balances
  • Income paid on the account including interest and dividends
  • Proceeds from the redemption of an account/sale of financial assets.

As a result Foreign accounts and entity structures (such as companies, trusts) owned by tax resident individuals may no longer be confidential and private.

Information about unauthorised assets held in different jurisdictions, as well as undeclared income generated by such assets, will soon become available to national governments as a result of the automatic exchange of this account information.

This is going to affect those jurisdictions which offer nil tax because in many cases they lack infrastructure to assist the business ventures in creating a factual commercial substance.


QX Trust Company acts as a conscience seeker for your company

We will ensure Tax-proofing your overseas business venture at Labuan, Malaysia with the following measures:-

  • Prompt and transparent tax payments
  • Help you take appropriate key management decisions
  • See to it that your annual compliance is in order
  • Ensure that you have a permanent office location.
  • Ensure employment of local staff.
  • Ensure that your entity has a bank account in that jurisdiction.

We at QX Trust Company can thus ensure that your overseas business venture will be without any stresses even in this era of CRS.