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Tax Engineering

E-Commerce Solutions

The growth of e-commerce over last years beats all the records and the majority of all operations are carried out remotely using electronic devices. Nowadays, it is hard to image a business that doesn’t sell its goods or services over the Internet or doesn’t accept online transactions from its clients or providers. The reason for that is an easiness and speed when processing electronic payments comparing to cash operations. Why does it happen and how can it be advantageous for your business? In order to see all the advantages that offshore e-commerce can contribute to the growth of your business, let´s ask ourselves first: What is E-commerce?    

What is E-Commerce?   

E-Commerce (electronic commerce or ES) is a particular field in economy of each country that involves financial and monetary operations conducted over Internet. In other words, it is a process of buying and selling goods or services online with no impediments of distance or time. The most common example of E-commerce is an online store.       

Types of E-Commerce  

There are several types of E-Commerce but we would like to point out only those that involve operations between consumers and businesses.   

  • Business to Consumer: Anyone who at least once purchased something online is familiar with this type of E-Commerce. It consists in online stores (businesses) selling goods or services to consumers connected to the webpage of the business over the Internet. It is a very convenient way of buying for a consumer because he can see and evaluate all the characteristics of the product without leaving his home. The seller, in its turn, can save money on office maintenance and respond quickly to changes in demand. Examples of B2B e-commerce are online stores like Aliexpress or Amazon.
  • Business to Business: In other words, two businesses (companies) are involved in the process of electronic commercial activity where one of them sells the goods or services to another. Through the use of online payment methods, the trade between two companies becomes more transparent, convenient and simplified. Example for B2B e-commerce is an online store Alibaba. 
  • Customer to Customer: It is a commercial activity between two individuals (physical persons) that trade goods or services with each other online. There are a lot of well-known platforms that can be used for this kind of transactions. Clear examples of this type of E-commerce are E-Bay and Wallapop, websites where anyone connected via Internet can trade any kind of legal goods or services.      
  • Customer to Business: This type of E-commerce is based on business operation generated by the consumer who places the demand and decides on terms and conditions of the service or goods that he wants to purchase. C2B is very common in tourism and luxury sectors where the client places a personalized request and the companies offer to fulfill it in exchange of money. 

All the countries with stable financial situation and favorable tax regimes that can be optimal for the development of e-commerce can be divided in two groups: lax onshore jurisdictions and offshore tax havens. Lax onshore jurisdictions are territories with relatively low tax rates (from 0% to 20%) and low share capital that has to be disbursed when the company is registered. Examples of these onshore jurisdictions would be: United Kingdom, Ireland, Malta, Estonia, Latvia, Bulgaria, Cyprus, Czech Republic, Hong Kong, Singapore, Canada, United States, Israel.  

Offshore E-Commerce 

Offshore E-commerce is a type of commercial activity carried out by an offshore company, a company registered outside of the country of residence of the owner of the business. The funds from the sales get transferred to an offshore bank account opened or in the same country where a company was registered or any other. It is also very common for offshore e-commerce to use offshore payment gateway in order to achieve maximum tax saving and anonymity. Examples of territories where offshore e-commerce can be carried out are: Belize, Panama, Costa Rica, Hong Kong, Singapore and Mauritius. 

Advantages of offshore E-Commerce

  • Considerable saving on tax: Offshore non resident companies can enjoy favorable tax regimes offered by such tax havens as Belize, Costa Rica, Hong Kong o Delaware. 
  • Possibility to enter international markets and sell your goods and services to customers in other countries avoiding the barriers of distance and time zones. 
  • Easiness to control all incoming money and expenses: Credit and debit card transactions get recorded by the payment gateway and can be easily reviewed through client’s dashboard and online banking.
  • Speed of transactions: When accepting money from the client or making payment to a provider, online transactions are executed in less time than cash or wire transfer monetary operations. 
  • Annual accounting and auditing are not required: Offshore companies (in its majority) are not obliged to present annual accounts. However, it is advisable to keep a record of them.    
  • Online communication between the participants of commercial activity: Any client can solve its doubts by sending instant e-mail or contacting a customer support via online chat within seconds.
  • Possibility to create competitive advantage: by saving on tax payment and office maintenance you have more financial resources to reinvest in your business and create competitive advantage.   

Our E-Commerce offshore package includes the following services:    

  • Offshore or onshore company formation
  • Opening of an offshore bank account in the name of the company
  • Offshore debit card in the name of the company
  • Offshore payment gateway to accept online payments in the name of the company

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